Correlation Between Consumer Staples and Invesco DWA
Can any of the company-specific risk be diversified away by investing in both Consumer Staples and Invesco DWA 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 Consumer Staples and Invesco DWA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consumer Staples Select and Invesco DWA Consumer, you can compare the effects of market volatilities on Consumer Staples and Invesco DWA 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 Consumer Staples with a short position of Invesco DWA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consumer Staples and Invesco DWA.
Diversification Opportunities for Consumer Staples and Invesco DWA
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Consumer and Invesco is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Consumer Staples Select and Invesco DWA Consumer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco DWA Consumer and Consumer Staples 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 Consumer Staples Select are associated (or correlated) with Invesco DWA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco DWA Consumer has no effect on the direction of Consumer Staples i.e., Consumer Staples and Invesco DWA go up and down completely randomly.
Pair Corralation between Consumer Staples and Invesco DWA
Considering the 90-day investment horizon Consumer Staples is expected to generate 5.88 times less return on investment than Invesco DWA. But when comparing it to its historical volatility, Consumer Staples Select is 1.12 times less risky than Invesco DWA. It trades about 0.09 of its potential returns per unit of risk. Invesco DWA Consumer is currently generating about 0.49 of returns per unit of risk over similar time horizon. If you would invest 10,163 in Invesco DWA Consumer on August 27, 2024 and sell it today you would earn a total of 845.00 from holding Invesco DWA Consumer or generate 8.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consumer Staples Select vs. Invesco DWA Consumer
Performance |
| Timeline |
| Consumer Staples Select |
| Invesco DWA Consumer |
Consumer Staples and Invesco DWA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consumer Staples and Invesco DWA
The main advantage of trading using opposite Consumer Staples and Invesco DWA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consumer Staples position performs unexpectedly, Invesco DWA 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 DWA will offset losses from the drop in Invesco DWA's long position.| Consumer Staples vs. Vanguard Consumer Discretionary | Consumer Staples vs. Vanguard Utilities Index | Consumer Staples vs. Vanguard Industrials Index | Consumer Staples vs. Vanguard Materials Index |
| Invesco DWA vs. Invesco DWA Consumer | Invesco DWA vs. Invesco DWA Basic | Invesco DWA vs. Invesco DWA Industrials | Invesco DWA vs. Invesco DWA Utilities |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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