Correlation Between Invesco SPTSX and Invesco 1
Can any of the company-specific risk be diversified away by investing in both Invesco SPTSX and Invesco 1 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 Invesco SPTSX and Invesco 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco SPTSX Composite and Invesco 1 5 Year, you can compare the effects of market volatilities on Invesco SPTSX and Invesco 1 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 Invesco SPTSX with a short position of Invesco 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco SPTSX and Invesco 1.
Diversification Opportunities for Invesco SPTSX and Invesco 1
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and Invesco is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Invesco SPTSX Composite and Invesco 1 5 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco 1 5 and Invesco SPTSX 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 Invesco SPTSX Composite are associated (or correlated) with Invesco 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco 1 5 has no effect on the direction of Invesco SPTSX i.e., Invesco SPTSX and Invesco 1 go up and down completely randomly.
Pair Corralation between Invesco SPTSX and Invesco 1
Assuming the 90 days trading horizon Invesco SPTSX Composite is expected to generate 1.78 times more return on investment than Invesco 1. However, Invesco SPTSX is 1.78 times more volatile than Invesco 1 5 Year. It trades about 0.46 of its potential returns per unit of risk. Invesco 1 5 Year is currently generating about 0.2 per unit of risk. If you would invest 3,291 in Invesco SPTSX Composite on September 1, 2024 and sell it today you would earn a total of 117.00 from holding Invesco SPTSX Composite or generate 3.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco SPTSX Composite vs. Invesco 1 5 Year
Performance |
| Timeline |
| Invesco SPTSX Composite |
| Invesco 1 5 |
Invesco SPTSX and Invesco 1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco SPTSX and Invesco 1
The main advantage of trading using opposite Invesco SPTSX and Invesco 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco SPTSX position performs unexpectedly, Invesco 1 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 1 will offset losses from the drop in Invesco 1's long position.| Invesco SPTSX vs. iShares SPTSX 60 | Invesco SPTSX vs. iShares Core SPTSX | Invesco SPTSX vs. Vanguard FTSE Canada | Invesco SPTSX vs. Global X SPTSX |
| Invesco 1 vs. Invesco FTSE RAFI | Invesco 1 vs. iShares 1 10Yr Laddered | Invesco 1 vs. Invesco Fundamental High | Invesco 1 vs. CI Canadian Convertible |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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