Correlation Between Invesco Technology and SSgA SPDR
Can any of the company-specific risk be diversified away by investing in both Invesco Technology and SSgA SPDR 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 Technology and SSgA SPDR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Technology SP and SSgA SPDR ETFs, you can compare the effects of market volatilities on Invesco Technology and SSgA SPDR 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 Technology with a short position of SSgA SPDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Technology and SSgA SPDR.
Diversification Opportunities for Invesco Technology and SSgA SPDR
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Invesco and SSgA is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Technology SP and SSgA SPDR ETFs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSgA SPDR ETFs and Invesco Technology 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 Technology SP are associated (or correlated) with SSgA SPDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSgA SPDR ETFs has no effect on the direction of Invesco Technology i.e., Invesco Technology and SSgA SPDR go up and down completely randomly.
Pair Corralation between Invesco Technology and SSgA SPDR
Assuming the 90 days trading horizon Invesco Technology is expected to generate 1.85 times less return on investment than SSgA SPDR. In addition to that, Invesco Technology is 1.03 times more volatile than SSgA SPDR ETFs. It trades about 0.02 of its total potential returns per unit of risk. SSgA SPDR ETFs is currently generating about 0.04 per unit of volatility. If you would invest 17,519 in SSgA SPDR ETFs on August 28, 2024 and sell it today you would earn a total of 150.00 from holding SSgA SPDR ETFs or generate 0.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Technology SP vs. SSgA SPDR ETFs
Performance |
| Timeline |
| Invesco Technology |
| SSgA SPDR ETFs |
Invesco Technology and SSgA SPDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Technology and SSgA SPDR
The main advantage of trading using opposite Invesco Technology and SSgA SPDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Technology position performs unexpectedly, SSgA SPDR 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 SSgA SPDR will offset losses from the drop in SSgA SPDR's long position.| Invesco Technology vs. Invesco MSCI Emerging | Invesco Technology vs. Invesco EURO STOXX | Invesco Technology vs. Invesco Markets Plc | Invesco Technology vs. Invesco FTSE RAFI |
| SSgA SPDR vs. Leverage Shares 3x | SSgA SPDR vs. WisdomTree SP 500 | SSgA SPDR vs. WisdomTree Silver 3x | SSgA SPDR vs. Leverage Shares 3x |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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