Correlation Between Invesco SP and 532457BU1

Can any of the company-specific risk be diversified away by investing in both Invesco SP and 532457BU1 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 532457BU1 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 ELI LILLY AND, you can compare the effects of market volatilities on Invesco SP and 532457BU1 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 532457BU1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco SP and 532457BU1.

Diversification Opportunities for Invesco SP and 532457BU1

-0.12

Correlation Coefficient

Invesco SP  532457BU1

Good diversification

The 3 months correlation between Invesco and 532457BU1 is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Invesco SP 500 and ELI LILLY AND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELI LILLY AND 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 532457BU1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELI LILLY AND has no effect on the direction of Invesco SP i.e., Invesco SP and 532457BU1 go up and down completely randomly.

Pair Corralation between Invesco SP and 532457BU1

Considering the 90-day investment horizon Invesco SP 500 is expected to under-perform the 532457BU1. But the etf apears to be less risky and, when comparing its historical volatility, Invesco SP 500 is 2.17 times less risky than 532457BU1. The etf trades about -0.13 of its potential returns per unit of risk. The ELI LILLY AND is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  8,384  in ELI LILLY AND on October 12, 2024 and sell it today you would lose (116.00) from holding ELI LILLY AND or give up 1.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	60.0%
Values	Daily Returns

Invesco SP 500  vs.  ELI LILLY AND

Invesco SP 500

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco SP 500 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Invesco SP is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

ELI LILLY AND

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ELI LILLY AND has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 532457BU1 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Invesco SP and 532457BU1

The main advantage of trading using opposite Invesco SP and 532457BU1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco SP position performs unexpectedly, 532457BU1 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 532457BU1 will offset losses from the drop in 532457BU1's long position.

The idea behind Invesco SP 500 and ELI LILLY AND 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.