Correlation Between Invesco SP and NBI Liquid

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

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

Diversification Opportunities for Invesco SP and NBI Liquid

-0.73

Correlation Coefficient

Invesco SP  NBI Liquid

Pay attention - limited upside

The 3 months correlation between Invesco and NBI is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Invesco SP 500 and NBI Liquid Alternatives in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBI Liquid Alternatives and Invesco SP 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 SP 500 are associated (or correlated) with NBI Liquid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBI Liquid Alternatives has no effect on the direction of Invesco SP i.e., Invesco SP and NBI Liquid go up and down completely randomly.

Pair Corralation between Invesco SP and NBI Liquid

Assuming the 90 days trading horizon Invesco SP 500 is expected to under-perform the NBI Liquid. In addition to that, Invesco SP is 4.34 times more volatile than NBI Liquid Alternatives. It trades about -0.16 of its total potential returns per unit of risk. NBI Liquid Alternatives is currently generating about 0.13 per unit of volatility. If you would invest  2,202  in NBI Liquid Alternatives on December 22, 2024 and sell it today you would earn a total of  97.00  from holding NBI Liquid Alternatives or generate 4.41% return on investment over 90 days.

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

Invesco SP 500  vs.  NBI Liquid Alternatives

Invesco SP 500

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

NBI Liquid Alternatives

Risk-Adjusted Performance

OK

Over the last 90 days NBI Liquid Alternatives has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, NBI Liquid is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Invesco SP and NBI Liquid

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

The idea behind Invesco SP 500 and NBI Liquid Alternatives 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.