Correlation Between SPDR SP and Invesco Solar
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Invesco Solar 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 SP and Invesco Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP Oil and Invesco Solar ETF, you can compare the effects of market volatilities on SPDR SP and Invesco Solar 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 SP with a short position of Invesco Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Invesco Solar.
Diversification Opportunities for SPDR SP and Invesco Solar
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SPDR and Invesco is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Oil and Invesco Solar ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Solar ETF and SPDR 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 SPDR SP Oil are associated (or correlated) with Invesco Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Solar ETF has no effect on the direction of SPDR SP i.e., SPDR SP and Invesco Solar go up and down completely randomly.
Pair Corralation between SPDR SP and Invesco Solar
Considering the 90-day investment horizon SPDR SP Oil is expected to under-perform the Invesco Solar. But the etf apears to be less risky and, when comparing its historical volatility, SPDR SP Oil is 1.57 times less risky than Invesco Solar. The etf trades about -0.08 of its potential returns per unit of risk. The Invesco Solar ETF is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,472 in Invesco Solar ETF on September 13, 2024 and sell it today you would earn a total of 33.00 from holding Invesco Solar ETF or generate 0.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP Oil vs. Invesco Solar ETF
Performance |
| Timeline |
| SPDR SP Oil |
| Invesco Solar ETF |
SPDR SP and Invesco Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Invesco Solar
The main advantage of trading using opposite SPDR SP and Invesco Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Invesco Solar 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 Solar will offset losses from the drop in Invesco Solar's long position.| SPDR SP vs. Energy Select Sector | SPDR SP vs. VanEck Semiconductor ETF | SPDR SP vs. Materials Select Sector | SPDR SP vs. SPDR SP Metals |
| Invesco Solar vs. iShares Global Clean | Invesco Solar vs. Invesco WilderHill Clean | Invesco Solar vs. First Trust NASDAQ | Invesco Solar vs. Global X Lithium |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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