Correlation Between Invesco BuyBack and SPDR SP

Can any of the company-specific risk be diversified away by investing in both Invesco BuyBack and SPDR SP 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 BuyBack and SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Invesco BuyBack Achievers and SPDR SP Dividend, you can compare the effects of market volatilities on Invesco BuyBack and SPDR SP 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 BuyBack with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco BuyBack and SPDR SP.

Diversification Opportunities for Invesco BuyBack and SPDR SP

0.79

Correlation Coefficient

Invesco BuyBack  SPDR SP

Poor diversification

The 3 months correlation between Invesco and SPDR is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Invesco BuyBack Achievers and SPDR SP Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Dividend and Invesco BuyBack 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 BuyBack Achievers are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Dividend has no effect on the direction of Invesco BuyBack i.e., Invesco BuyBack and SPDR SP go up and down completely randomly.

Pair Corralation between Invesco BuyBack and SPDR SP

Considering the 90-day investment horizon Invesco BuyBack is expected to generate 1.56 times less return on investment than SPDR SP. In addition to that, Invesco BuyBack is 1.64 times more volatile than SPDR SP Dividend. It trades about 0.15 of its total potential returns per unit of risk. SPDR SP Dividend is currently generating about 0.38 per unit of volatility. If you would invest  12,772  in SPDR SP Dividend on February 22, 2024 and sell it today you would earn a total of  427.00  from holding SPDR SP Dividend or generate 3.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Invesco BuyBack Achievers  vs.  SPDR SP Dividend

Invesco BuyBack Achievers

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco BuyBack Achievers are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable forward-looking signals, Invesco BuyBack is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

SPDR SP Dividend

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP Dividend are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, SPDR SP is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Invesco BuyBack and SPDR SP

The main advantage of trading using opposite Invesco BuyBack and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco BuyBack position performs unexpectedly, SPDR SP 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 SP will offset losses from the drop in SPDR SP's long position.

The idea behind Invesco BuyBack Achievers and SPDR SP Dividend pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.