Correlation Between SPDR BOFA and Invesco Actively
Can any of the company-specific risk be diversified away by investing in both SPDR BOFA and Invesco Actively 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 BOFA and Invesco Actively into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR BOFA MERRILL and Invesco Actively Managed, you can compare the effects of market volatilities on SPDR BOFA and Invesco Actively 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 BOFA with a short position of Invesco Actively. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR BOFA and Invesco Actively.
Diversification Opportunities for SPDR BOFA and Invesco Actively
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SPDR and Invesco is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding SPDR BOFA MERRILL and Invesco Actively Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Actively Managed and SPDR BOFA 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 BOFA MERRILL are associated (or correlated) with Invesco Actively. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Actively Managed has no effect on the direction of SPDR BOFA i.e., SPDR BOFA and Invesco Actively go up and down completely randomly.
Pair Corralation between SPDR BOFA and Invesco Actively
Given the investment horizon of 90 days SPDR BOFA MERRILL is expected to generate 2.18 times more return on investment than Invesco Actively. However, SPDR BOFA is 2.18 times more volatile than Invesco Actively Managed. It trades about 0.19 of its potential returns per unit of risk. Invesco Actively Managed is currently generating about 0.36 per unit of risk. If you would invest 1,876 in SPDR BOFA MERRILL on November 18, 2024 and sell it today you would earn a total of 94.00 from holding SPDR BOFA MERRILL or generate 5.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR BOFA MERRILL vs. Invesco Actively Managed
Performance |
| Timeline |
| SPDR BOFA MERRILL |
| Invesco Actively Managed |
SPDR BOFA and Invesco Actively Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR BOFA and Invesco Actively
The main advantage of trading using opposite SPDR BOFA and Invesco Actively positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR BOFA position performs unexpectedly, Invesco Actively 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 Actively will offset losses from the drop in Invesco Actively's long position.| SPDR BOFA vs. Cambria Micro And | SPDR BOFA vs. Invesco Actively Managed | SPDR BOFA vs. Harbor ETF Trust | SPDR BOFA vs. iShares Trust |
| Invesco Actively vs. Cambria Micro And | Invesco Actively vs. Harbor ETF Trust | Invesco Actively vs. iShares Trust | Invesco Actively vs. Xtrackers MSCI Emerging |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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