Correlation Between Renaissance IPO and Invesco SP

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

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

Diversification Opportunities for Renaissance IPO and Invesco SP

0.93

Correlation Coefficient

Renaissance IPO  Invesco SP

Almost no diversification

The 3 months correlation between Renaissance and Invesco is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Renaissance IPO ETF and Invesco SP Spin Off in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP Spin and Renaissance IPO 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 Renaissance IPO ETF 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 Spin has no effect on the direction of Renaissance IPO i.e., Renaissance IPO and Invesco SP go up and down completely randomly.

Pair Corralation between Renaissance IPO and Invesco SP

Considering the 90-day investment horizon Renaissance IPO is expected to generate 1.64 times less return on investment than Invesco SP. But when comparing it to its historical volatility, Renaissance IPO ETF is 1.24 times less risky than Invesco SP. It trades about 0.15 of its potential returns per unit of risk. Invesco SP Spin Off is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  7,462  in Invesco SP Spin Off on September 12, 2024 and sell it today you would earn a total of  1,311  from holding Invesco SP Spin Off or generate 17.57% return on investment over 90 days.

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

Renaissance IPO ETF  vs.  Invesco SP Spin Off

Renaissance IPO ETF

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Renaissance IPO ETF are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Renaissance IPO may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Invesco SP Spin

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco SP Spin Off are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Invesco SP exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Renaissance IPO and Invesco SP

The main advantage of trading using opposite Renaissance IPO and Invesco SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Renaissance IPO 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 Renaissance IPO ETF and Invesco SP Spin Off 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..