Correlation Between State Street and Invesco Plc
Can any of the company-specific risk be diversified away by investing in both State Street and Invesco Plc at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining State Street and Invesco Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Corp and Invesco Plc, you can compare the effects of market volatilities on State Street and Invesco Plc and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in State Street with a short position of Invesco Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Invesco Plc.
Diversification Opportunities for State Street and Invesco Plc
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between State and Invesco is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding State Street Corp and Invesco Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Plc and State Street is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on State Street Corp are associated (or correlated) with Invesco Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Plc has no effect on the direction of State Street i.e., State Street and Invesco Plc go up and down completely randomly.
Pair Corralation between State Street and Invesco Plc
Considering the 90-day investment horizon State Street is expected to generate 5.39 times less return on investment than Invesco Plc. But when comparing it to its historical volatility, State Street Corp is 1.44 times less risky than Invesco Plc. It trades about 0.06 of its potential returns per unit of risk. Invesco Plc is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,712 in Invesco Plc on November 9, 2024 and sell it today you would earn a total of 205.00 from holding Invesco Plc or generate 11.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street Corp vs. Invesco Plc
Performance |
| Timeline |
| State Street Corp |
| Invesco Plc |
State Street and Invesco Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Invesco Plc
The main advantage of trading using opposite State Street and Invesco Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Invesco Plc can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Invesco Plc will offset losses from the drop in Invesco Plc's long position.| State Street vs. Northern Trust | State Street vs. Franklin Resources | State Street vs. Invesco Plc | State Street vs. T Rowe Price |
| Invesco Plc vs. T Rowe Price | Invesco Plc vs. Bank of New | Invesco Plc vs. Principal Financial Group | Invesco Plc vs. Ameriprise Financial |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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