Correlation Between SP 500 and Invesco Markets
Can any of the company-specific risk be diversified away by investing in both SP 500 and Invesco Markets 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 SP 500 and Invesco Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SP 500 VIX and Invesco Markets II, you can compare the effects of market volatilities on SP 500 and Invesco Markets 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 SP 500 with a short position of Invesco Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of SP 500 and Invesco Markets.
Diversification Opportunities for SP 500 and Invesco Markets
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between VILX and Invesco is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding SP 500 VIX and Invesco Markets II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Markets II and SP 500 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 SP 500 VIX are associated (or correlated) with Invesco Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Markets II has no effect on the direction of SP 500 i.e., SP 500 and Invesco Markets go up and down completely randomly.
Pair Corralation between SP 500 and Invesco Markets
Assuming the 90 days trading horizon SP 500 VIX is expected to generate 19.81 times more return on investment than Invesco Markets. However, SP 500 is 19.81 times more volatile than Invesco Markets II. It trades about 0.03 of its potential returns per unit of risk. Invesco Markets II is currently generating about 0.06 per unit of risk. If you would invest 3,100 in SP 500 VIX on October 28, 2024 and sell it today you would earn a total of 132,633 from holding SP 500 VIX or generate 4278.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SP 500 VIX vs. Invesco Markets II
Performance |
| Timeline |
| SP 500 VIX |
| Invesco Markets II |
SP 500 and Invesco Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SP 500 and Invesco Markets
The main advantage of trading using opposite SP 500 and Invesco Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SP 500 position performs unexpectedly, Invesco Markets 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 Markets will offset losses from the drop in Invesco Markets' long position.| SP 500 vs. iShares MSCI Japan | SP 500 vs. Amundi EUR High | SP 500 vs. iShares JP Morgan | SP 500 vs. Xtrackers MSCI |
| Invesco Markets vs. Vanguard FTSE Developed | Invesco Markets vs. Leverage Shares 2x | Invesco Markets vs. Amundi Index Solutions | Invesco Markets vs. Amundi Index Solutions |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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