Correlation Between Invesco FTSE and IShares Core
Can any of the company-specific risk be diversified away by investing in both Invesco FTSE and IShares Core 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 FTSE and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco FTSE RAFI and iShares Core SP, you can compare the effects of market volatilities on Invesco FTSE and IShares Core 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 FTSE with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco FTSE and IShares Core.
Diversification Opportunities for Invesco FTSE and IShares Core
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and IShares is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Invesco FTSE RAFI and iShares Core SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core SP and Invesco FTSE 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 FTSE RAFI are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core SP has no effect on the direction of Invesco FTSE i.e., Invesco FTSE and IShares Core go up and down completely randomly.
Pair Corralation between Invesco FTSE and IShares Core
Considering the 90-day investment horizon Invesco FTSE RAFI is expected to generate 1.0 times more return on investment than IShares Core. However, Invesco FTSE is 1.0 times more volatile than iShares Core SP. It trades about -0.14 of its potential returns per unit of risk. iShares Core SP is currently generating about -0.19 per unit of risk. If you would invest 3,781 in Invesco FTSE RAFI on January 23, 2024 and sell it today you would lose (81.00) from holding Invesco FTSE RAFI or give up 2.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Invesco FTSE RAFI vs. iShares Core SP
Performance |
| Timeline |
| Invesco FTSE RAFI |
| iShares Core SP |
Invesco FTSE and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco FTSE and IShares Core
The main advantage of trading using opposite Invesco FTSE and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco FTSE position performs unexpectedly, IShares Core 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 IShares Core will offset losses from the drop in IShares Core's long position.| Invesco FTSE vs. Northern Lights | Invesco FTSE vs. HUMANA INC | Invesco FTSE vs. Aquagold International | Invesco FTSE vs. Barloworld Ltd ADR |
| IShares Core vs. Northern Lights | IShares Core vs. HUMANA INC | IShares Core vs. Aquagold International | IShares Core vs. Barloworld Ltd ADR |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |