Correlation Between SPDR Barclays and Invesco SP
Can any of the company-specific risk be diversified away by investing in both SPDR Barclays and Invesco SP 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 SPDR Barclays and Invesco SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Barclays Intermediate and Invesco SP 500, you can compare the effects of market volatilities on SPDR Barclays and Invesco SP 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 SPDR Barclays with a short position of Invesco SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Barclays and Invesco SP.
Diversification Opportunities for SPDR Barclays and Invesco SP
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SPDR and Invesco is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Barclays Intermediate and Invesco SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP 500 and SPDR Barclays 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 SPDR Barclays Intermediate are associated (or correlated) with Invesco SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP 500 has no effect on the direction of SPDR Barclays i.e., SPDR Barclays and Invesco SP go up and down completely randomly.
Pair Corralation between SPDR Barclays and Invesco SP
Given the investment horizon of 90 days SPDR Barclays Intermediate is expected to under-perform the Invesco SP. But the etf apears to be less risky and, when comparing its historical volatility, SPDR Barclays Intermediate is 3.5 times less risky than Invesco SP. The etf trades about -0.07 of its potential returns per unit of risk. The Invesco SP 500 is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 5,664 in Invesco SP 500 on January 20, 2024 and sell it today you would earn a total of 69.00 from holding Invesco SP 500 or generate 1.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Barclays Intermediate vs. Invesco SP 500
Performance |
| Timeline |
| SPDR Barclays Interm |
| Invesco SP 500 |
SPDR Barclays and Invesco SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Barclays and Invesco SP
The main advantage of trading using opposite SPDR Barclays and Invesco SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Barclays position performs unexpectedly, Invesco SP 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 SP will offset losses from the drop in Invesco SP's long position.| SPDR Barclays vs. PrimeEnergy | SPDR Barclays vs. Israel Acquisitions Corp | SPDR Barclays vs. CKX Lands | SPDR Barclays vs. HUMANA INC |
| Invesco SP vs. Dimensional Targeted Value | Invesco SP vs. Dimensional World ex | Invesco SP vs. Dimensional Small Cap |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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