Correlation Between Invesco SP and Strive 500
Can any of the company-specific risk be diversified away by investing in both Invesco SP and Strive 500 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 Strive 500 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 Strive 500 ETF, you can compare the effects of market volatilities on Invesco SP and Strive 500 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 Strive 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco SP and Strive 500.
Diversification Opportunities for Invesco SP and Strive 500
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and Strive is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Invesco SP 500 and Strive 500 ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strive 500 ETF 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 Strive 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strive 500 ETF has no effect on the direction of Invesco SP i.e., Invesco SP and Strive 500 go up and down completely randomly.
Pair Corralation between Invesco SP and Strive 500
Considering the 90-day investment horizon Invesco SP 500 is expected to under-perform the Strive 500. But the etf apears to be less risky and, when comparing its historical volatility, Invesco SP 500 is 1.14 times less risky than Strive 500. The etf trades about -0.19 of its potential returns per unit of risk. The Strive 500 ETF is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 3,337 in Strive 500 ETF on February 3, 2024 and sell it today you would lose (84.00) from holding Strive 500 ETF or give up 2.52% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Invesco SP 500 vs. Strive 500 ETF
Performance |
Timeline |
Invesco SP 500 |
Strive 500 ETF |
Invesco SP and Strive 500 Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Invesco SP and Strive 500
The main advantage of trading using opposite Invesco SP and Strive 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco SP position performs unexpectedly, Strive 500 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 Strive 500 will offset losses from the drop in Strive 500's long position.The idea behind Invesco SP 500 and Strive 500 ETF 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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