Correlation Between SPDR FTSE and Invesco International
Can any of the company-specific risk be diversified away by investing in both SPDR FTSE and Invesco International 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 SPDR FTSE and Invesco International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR FTSE International and Invesco International Corporate, you can compare the effects of market volatilities on SPDR FTSE and Invesco International 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 SPDR FTSE with a short position of Invesco International. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR FTSE and Invesco International.
Diversification Opportunities for SPDR FTSE and Invesco International
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and Invesco is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding SPDR FTSE International and Invesco International Corporat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco International and SPDR FTSE 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 SPDR FTSE International are associated (or correlated) with Invesco International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco International has no effect on the direction of SPDR FTSE i.e., SPDR FTSE and Invesco International go up and down completely randomly.
Pair Corralation between SPDR FTSE and Invesco International
Considering the 90-day investment horizon SPDR FTSE International is expected to generate 0.92 times more return on investment than Invesco International. However, SPDR FTSE International is 1.09 times less risky than Invesco International. It trades about -0.05 of its potential returns per unit of risk. Invesco International Corporate is currently generating about -0.11 per unit of risk. If you would invest 3,795 in SPDR FTSE International on August 30, 2024 and sell it today you would lose (27.00) from holding SPDR FTSE International or give up 0.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
SPDR FTSE International vs. Invesco International Corporat
Performance |
| Timeline |
| SPDR FTSE International |
| Invesco International |
SPDR FTSE and Invesco International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR FTSE and Invesco International
The main advantage of trading using opposite SPDR FTSE and Invesco International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR FTSE position performs unexpectedly, Invesco International 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 International will offset losses from the drop in Invesco International's long position.| SPDR FTSE vs. SPDR Bloomberg Emerging | SPDR FTSE vs. Vanguard Emerging Markets | SPDR FTSE vs. SPDR Bloomberg Barclays | SPDR FTSE vs. VanEck JP Morgan |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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