Correlation Between Invesco International and SPDR Bloomberg

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

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

Diversification Opportunities for Invesco International and SPDR Bloomberg

0.97

Correlation Coefficient

Invesco International  SPDR Bloomberg

Almost no diversification

The 3 months correlation between Invesco and SPDR is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Invesco International Corporat and SPDR Bloomberg Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Bloomberg Short and Invesco International 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 International Corporate are associated (or correlated) with SPDR Bloomberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Bloomberg Short has no effect on the direction of Invesco International i.e., Invesco International and SPDR Bloomberg go up and down completely randomly.

Pair Corralation between Invesco International and SPDR Bloomberg

Given the investment horizon of 90 days Invesco International is expected to generate 1.1 times less return on investment than SPDR Bloomberg. In addition to that, Invesco International is 1.04 times more volatile than SPDR Bloomberg Short. It trades about 0.11 of its total potential returns per unit of risk. SPDR Bloomberg Short is currently generating about 0.12 per unit of volatility. If you would invest  2,533  in SPDR Bloomberg Short on December 28, 2024 and sell it today you would earn a total of  89.00  from holding SPDR Bloomberg Short or generate 3.51% return on investment over 90 days.

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

Invesco International Corporat  vs.  SPDR Bloomberg Short

Invesco International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco International Corporate are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Invesco International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SPDR Bloomberg Short

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Bloomberg Short are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, SPDR Bloomberg is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Invesco International and SPDR Bloomberg

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

The idea behind Invesco International Corporate and SPDR Bloomberg Short 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.