Correlation Between Invesco SP and SPDR Kensho
Can any of the company-specific risk be diversified away by investing in both Invesco SP and SPDR Kensho 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 SP and SPDR Kensho into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco SP MidCap and SPDR Kensho New, you can compare the effects of market volatilities on Invesco SP and SPDR Kensho 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 SP with a short position of SPDR Kensho. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco SP and SPDR Kensho.
Diversification Opportunities for Invesco SP and SPDR Kensho
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and SPDR is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Invesco SP MidCap and SPDR Kensho New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Kensho New and Invesco 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 Invesco SP MidCap are associated (or correlated) with SPDR Kensho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Kensho New has no effect on the direction of Invesco SP i.e., Invesco SP and SPDR Kensho go up and down completely randomly.
Pair Corralation between Invesco SP and SPDR Kensho
Given the investment horizon of 90 days Invesco SP MidCap is expected to generate 0.81 times more return on investment than SPDR Kensho. However, Invesco SP MidCap is 1.23 times less risky than SPDR Kensho. It trades about -0.17 of its potential returns per unit of risk. SPDR Kensho New is currently generating about -0.15 per unit of risk. If you would invest 11,435 in Invesco SP MidCap on January 25, 2024 and sell it today you would lose (417.00) from holding Invesco SP MidCap or give up 3.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco SP MidCap vs. SPDR Kensho New
Performance |
| Timeline |
| Invesco SP MidCap |
| SPDR Kensho New |
Invesco SP and SPDR Kensho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco SP and SPDR Kensho
The main advantage of trading using opposite Invesco SP and SPDR Kensho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco SP position performs unexpectedly, SPDR Kensho 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 SPDR Kensho will offset losses from the drop in SPDR Kensho's long position.| Invesco SP vs. SPDR Russell 1000 | Invesco SP vs. SPDR MSCI USA | Invesco SP vs. SPDR MSCI EAFE | Invesco SP vs. SPDR SSGA Large |
| SPDR Kensho vs. Vanguard Small Cap Growth | SPDR Kensho vs. Vanguard Mid Cap Value | SPDR Kensho vs. Vanguard Small Cap Value | SPDR Kensho vs. Vanguard Mid Cap Index |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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