Correlation Between Invesco SP and Financial
Can any of the company-specific risk be diversified away by investing in both Invesco SP and Financial 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 SP and Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco SP 500 and Financial 15 Split, you can compare the effects of market volatilities on Invesco SP and Financial 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 SP with a short position of Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco SP and Financial.
Diversification Opportunities for Invesco SP and Financial
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Invesco and Financial is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Invesco SP 500 and Financial 15 Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial 15 Split and Invesco SP 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 SP 500 are associated (or correlated) with Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial 15 Split has no effect on the direction of Invesco SP i.e., Invesco SP and Financial go up and down completely randomly.
Pair Corralation between Invesco SP and Financial
Assuming the 90 days trading horizon Invesco SP 500 is expected to generate 2.66 times more return on investment than Financial. However, Invesco SP is 2.66 times more volatile than Financial 15 Split. It trades about 0.25 of its potential returns per unit of risk. Financial 15 Split is currently generating about 0.39 per unit of risk. If you would invest 2,495 in Invesco SP 500 on November 18, 2024 and sell it today you would earn a total of 143.00 from holding Invesco SP 500 or generate 5.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco SP 500 vs. Financial 15 Split
Performance |
| Timeline |
| Invesco SP 500 |
| Financial 15 Split |
Invesco SP and Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco SP and Financial
The main advantage of trading using opposite Invesco SP and Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco SP position performs unexpectedly, Financial 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 Financial will offset losses from the drop in Financial's long position.| Invesco SP vs. iShares SPTSX 60 | Invesco SP vs. iShares Core SP | Invesco SP vs. iShares Core SPTSX | Invesco SP vs. BMO Aggregate Bond |
| Financial vs. North American Financial | Financial vs. Dividend 15 Split | Financial vs. Dividend Growth Split | Financial vs. Dividend 15 Split |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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