Correlation Between Invesco International and SPDR SP

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

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

Diversification Opportunities for Invesco International and SPDR SP

0.9

Correlation Coefficient

Invesco International  SPDR SP

Almost no diversification

The 3 months correlation between Invesco and SPDR is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Invesco International Dividend and SPDR SP International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP International 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 Dividend are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP International has no effect on the direction of Invesco International i.e., Invesco International and SPDR SP go up and down completely randomly.

Pair Corralation between Invesco International and SPDR SP

Considering the 90-day investment horizon Invesco International Dividend is expected to under-perform the SPDR SP. In addition to that, Invesco International is 1.27 times more volatile than SPDR SP International. It trades about -0.19 of its total potential returns per unit of risk. SPDR SP International is currently generating about -0.23 per unit of volatility. If you would invest  3,613  in SPDR SP International on September 21, 2024 and sell it today you would lose (118.00) from holding SPDR SP International or give up 3.27% of portfolio value over 90 days.

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

Invesco International Dividend  vs.  SPDR SP International

Invesco International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco International Dividend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's forward indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

SPDR SP International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR SP International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with Invesco International and SPDR SP

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

The idea behind Invesco International Dividend and SPDR SP International 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.