Correlation Between Invesco DWA and SonicShares Global

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

By analyzing existing cross correlation between Invesco DWA Basic and SonicShares Global Shipping, you can compare the effects of market volatilities on Invesco DWA and SonicShares Global 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 DWA with a short position of SonicShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco DWA and SonicShares Global.

Diversification Opportunities for Invesco DWA and SonicShares Global

0.33

Correlation Coefficient

Invesco DWA  SonicShares Global

Weak diversification

The 3 months correlation between Invesco and SonicShares is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Invesco DWA Basic and SonicShares Global Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SonicShares Global and Invesco DWA 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 DWA Basic are associated (or correlated) with SonicShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SonicShares Global has no effect on the direction of Invesco DWA i.e., Invesco DWA and SonicShares Global go up and down completely randomly.

Pair Corralation between Invesco DWA and SonicShares Global

Considering the 90-day investment horizon Invesco DWA Basic is expected to under-perform the SonicShares Global. But the etf apears to be less risky and, when comparing its historical volatility, Invesco DWA Basic is 1.3 times less risky than SonicShares Global. The etf trades about -0.55 of its potential returns per unit of risk. The SonicShares Global Shipping is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest  3,170  in SonicShares Global Shipping on September 26, 2024 and sell it today you would lose (188.00) from holding SonicShares Global Shipping or give up 5.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Invesco DWA Basic  vs.  SonicShares Global Shipping

Invesco DWA Basic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco DWA Basic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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.

SonicShares Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SonicShares Global Shipping 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 comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with Invesco DWA and SonicShares Global

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

The idea behind Invesco DWA Basic and SonicShares Global Shipping 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.