Correlation Between Invesco SP and Exchange Listed

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

Diversification Opportunities for Invesco SP and Exchange Listed

0.92

Correlation Coefficient

Invesco SP  Exchange Listed

Almost no diversification

The 3 months correlation between Invesco and Exchange is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Invesco SP 500 and Exchange Listed Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Listed Funds 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 Exchange Listed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Listed Funds has no effect on the direction of Invesco SP i.e., Invesco SP and Exchange Listed go up and down completely randomly.

Pair Corralation between Invesco SP and Exchange Listed

Considering the 90-day investment horizon Invesco SP 500 is expected to generate 1.26 times more return on investment than Exchange Listed. However, Invesco SP is 1.26 times more volatile than Exchange Listed Funds. It trades about 0.09 of its potential returns per unit of risk. Exchange Listed Funds is currently generating about 0.07 per unit of risk. If you would invest  8,199  in Invesco SP 500 on September 29, 2024 and sell it today you would earn a total of  876.00  from holding Invesco SP 500 or generate 10.68% return on investment over 90 days.

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

Invesco SP 500  vs.  Exchange Listed Funds

Invesco SP 500

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco SP 500 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Invesco SP is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Exchange Listed Funds

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exchange Listed Funds has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Exchange Listed is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Invesco SP and Exchange Listed

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

The idea behind Invesco SP 500 and Exchange Listed Funds 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.