Correlation Between Amundi ETF and Invesco SP

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

By analyzing existing cross correlation between Amundi ETF Leveraged and Invesco SP 500, you can compare the effects of market volatilities on Amundi ETF and Invesco 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 Amundi ETF with a short position of Invesco SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amundi ETF and Invesco SP.

Diversification Opportunities for Amundi ETF and Invesco SP

0.81

Correlation Coefficient

Amundi ETF  Invesco SP

Very poor diversification

The 3 months correlation between Amundi and Invesco is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Amundi ETF Leveraged and Invesco SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP 500 and Amundi ETF 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 Amundi ETF Leveraged are associated (or correlated) with Invesco SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP 500 has no effect on the direction of Amundi ETF i.e., Amundi ETF and Invesco SP go up and down completely randomly.

Pair Corralation between Amundi ETF and Invesco SP

Assuming the 90 days trading horizon Amundi ETF Leveraged is expected to generate 1.81 times more return on investment than Invesco SP. However, Amundi ETF is 1.81 times more volatile than Invesco SP 500. It trades about 0.01 of its potential returns per unit of risk. Invesco SP 500 is currently generating about -0.37 per unit of risk. If you would invest  2,551  in Amundi ETF Leveraged on September 27, 2024 and sell it today you would earn a total of  4.00  from holding Amundi ETF Leveraged or generate 0.16% return on investment over 90 days.

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

Amundi ETF Leveraged  vs.  Invesco SP 500

Amundi ETF Leveraged

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amundi ETF Leveraged are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Amundi ETF sustained solid returns over the last few months and may actually be approaching a breakup point.

Invesco SP 500

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco SP 500 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Invesco SP is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amundi ETF and Invesco SP

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

The idea behind Amundi ETF Leveraged and Invesco SP 500 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.