Correlation Between SPDR SSgA and Invesco Multi

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

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

Diversification Opportunities for SPDR SSgA and Invesco Multi

0.31

Correlation Coefficient

SPDR SSgA  Invesco Multi

Weak diversification

The 3 months correlation between SPDR and Invesco is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SSgA Income and Invesco Multi Strategy Alterna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Multi Strategy and SPDR SSgA 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 SSgA Income are associated (or correlated) with Invesco Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Multi Strategy has no effect on the direction of SPDR SSgA i.e., SPDR SSgA and Invesco Multi go up and down completely randomly.

Pair Corralation between SPDR SSgA and Invesco Multi

Given the investment horizon of 90 days SPDR SSgA Income is expected to generate 0.32 times more return on investment than Invesco Multi. However, SPDR SSgA Income is 3.09 times less risky than Invesco Multi. It trades about 0.1 of its potential returns per unit of risk. Invesco Multi Strategy Alternative is currently generating about 0.02 per unit of risk. If you would invest  3,105  in SPDR SSgA Income on December 28, 2024 and sell it today you would earn a total of  68.00  from holding SPDR SSgA Income or generate 2.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

SPDR SSgA Income  vs.  Invesco Multi Strategy Alterna

SPDR SSgA Income

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SSgA Income are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. 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.

Invesco Multi Strategy

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Multi Strategy Alternative are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Invesco Multi is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SPDR SSgA and Invesco Multi

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

The idea behind SPDR SSgA Income and Invesco Multi Strategy Alternative 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.