Correlation Between Procure Space and Invesco DWA

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

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

Diversification Opportunities for Procure Space and Invesco DWA

0.47

Correlation Coefficient

Procure Space  Invesco DWA

Very weak diversification

The 3 months correlation between Procure and Invesco is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Procure Space ETF and Invesco DWA Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco DWA Utilities and Procure Space 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 Procure Space ETF are associated (or correlated) with Invesco DWA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco DWA Utilities has no effect on the direction of Procure Space i.e., Procure Space and Invesco DWA go up and down completely randomly.

Pair Corralation between Procure Space and Invesco DWA

Considering the 90-day investment horizon Procure Space ETF is expected to generate 1.99 times more return on investment than Invesco DWA. However, Procure Space is 1.99 times more volatile than Invesco DWA Utilities. It trades about 0.0 of its potential returns per unit of risk. Invesco DWA Utilities is currently generating about -0.39 per unit of risk. If you would invest  2,288  in Procure Space ETF on September 23, 2024 and sell it today you would lose (6.00) from holding Procure Space ETF or give up 0.26% of portfolio value over 90 days.

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

Procure Space ETF  vs.  Invesco DWA Utilities

Procure Space ETF

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Procure Space ETF are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Procure Space displayed solid returns over the last few months and may actually be approaching a breakup point.

Invesco DWA Utilities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco DWA Utilities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Invesco DWA is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Procure Space and Invesco DWA

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

The idea behind Procure Space ETF and Invesco DWA Utilities 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.