Correlation Between Invesco SP and Invesco FTSE

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

Diversification Opportunities for Invesco SP and Invesco FTSE

0.17

Correlation Coefficient

Invesco SP  Invesco FTSE

Average diversification

The 3 months correlation between Invesco and Invesco is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Invesco SP 500 and Invesco FTSE Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco FTSE Emerging 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 Invesco FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco FTSE Emerging has no effect on the direction of Invesco SP i.e., Invesco SP and Invesco FTSE go up and down completely randomly.

Pair Corralation between Invesco SP and Invesco FTSE

Assuming the 90 days trading horizon Invesco SP 500 is expected to generate 0.9 times more return on investment than Invesco FTSE. However, Invesco SP 500 is 1.11 times less risky than Invesco FTSE. It trades about 0.04 of its potential returns per unit of risk. Invesco FTSE Emerging is currently generating about -0.08 per unit of risk. If you would invest  5,987  in Invesco SP 500 on October 26, 2024 and sell it today you would earn a total of  99.00  from holding Invesco SP 500 or generate 1.65% return on investment over 90 days.

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

Invesco SP 500  vs.  Invesco FTSE Emerging

Invesco SP 500

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco SP 500 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Invesco SP is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Invesco FTSE Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Invesco SP and Invesco FTSE

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

The idea behind Invesco SP 500 and Invesco FTSE Emerging 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.

Check out your portfolio center.

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.