Correlation Between SPDR DoubleLine and Invesco Fundamental

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

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

Diversification Opportunities for SPDR DoubleLine and Invesco Fundamental

0.83

Correlation Coefficient

SPDR DoubleLine  Invesco Fundamental

Very poor diversification

The 3 months correlation between SPDR and Invesco is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding SPDR DoubleLine Emerging and Invesco Fundamental Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Fundamental and SPDR DoubleLine 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 DoubleLine Emerging are associated (or correlated) with Invesco Fundamental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Fundamental has no effect on the direction of SPDR DoubleLine i.e., SPDR DoubleLine and Invesco Fundamental go up and down completely randomly.

Pair Corralation between SPDR DoubleLine and Invesco Fundamental

Given the investment horizon of 90 days SPDR DoubleLine Emerging is expected to generate 0.62 times more return on investment than Invesco Fundamental. However, SPDR DoubleLine Emerging is 1.6 times less risky than Invesco Fundamental. It trades about 0.16 of its potential returns per unit of risk. Invesco Fundamental Investment is currently generating about 0.09 per unit of risk. If you would invest  4,009  in SPDR DoubleLine Emerging on October 12, 2024 and sell it today you would earn a total of  212.00  from holding SPDR DoubleLine Emerging or generate 5.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.47%
Values	Daily Returns

SPDR DoubleLine Emerging  vs.  Invesco Fundamental Investment

SPDR DoubleLine Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR DoubleLine Emerging has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, SPDR DoubleLine is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Invesco Fundamental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Fundamental Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Invesco Fundamental is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SPDR DoubleLine and Invesco Fundamental

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

The idea behind SPDR DoubleLine Emerging and Invesco Fundamental Investment 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.