Correlation Between Invesco Zacks and SPDR SSgA

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

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

Diversification Opportunities for Invesco Zacks and SPDR SSgA

0.88

Correlation Coefficient

Invesco Zacks  SPDR SSgA

Very poor diversification

The 3 months correlation between Invesco and SPDR is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Zacks Multi Asset and SPDR SSgA Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSgA Income and Invesco Zacks 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 Zacks Multi Asset are associated (or correlated) with SPDR SSgA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSgA Income has no effect on the direction of Invesco Zacks i.e., Invesco Zacks and SPDR SSgA go up and down completely randomly.

Pair Corralation between Invesco Zacks and SPDR SSgA

Considering the 90-day investment horizon Invesco Zacks Multi Asset is expected to generate 1.91 times more return on investment than SPDR SSgA. However, Invesco Zacks is 1.91 times more volatile than SPDR SSgA Income. It trades about 0.05 of its potential returns per unit of risk. SPDR SSgA Income is currently generating about 0.05 per unit of risk. If you would invest  2,065  in Invesco Zacks Multi Asset on October 11, 2024 and sell it today you would earn a total of  480.00  from holding Invesco Zacks Multi Asset or generate 23.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Invesco Zacks Multi Asset  vs.  SPDR SSgA Income

Invesco Zacks Multi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Zacks Multi Asset has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Invesco Zacks is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SPDR SSgA Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR SSgA Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking signals, SPDR SSgA is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Invesco Zacks and SPDR SSgA

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

The idea behind Invesco Zacks Multi Asset and SPDR SSgA Income 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.