Correlation Between Invesco BulletShares and SSgA SPDR

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

By analyzing existing cross correlation between Invesco BulletShares 2024 and SSgA SPDR ETFs, you can compare the effects of market volatilities on Invesco BulletShares and SSgA SPDR 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 BulletShares with a short position of SSgA SPDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco BulletShares and SSgA SPDR.

Diversification Opportunities for Invesco BulletShares and SSgA SPDR

-0.55

Correlation Coefficient

Invesco BulletShares  SSgA SPDR

Excellent diversification

The 3 months correlation between Invesco and SSgA is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Invesco BulletShares 2024 and SSgA SPDR ETFs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSgA SPDR ETFs and Invesco BulletShares 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 BulletShares 2024 are associated (or correlated) with SSgA SPDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSgA SPDR ETFs has no effect on the direction of Invesco BulletShares i.e., Invesco BulletShares and SSgA SPDR go up and down completely randomly.

Pair Corralation between Invesco BulletShares and SSgA SPDR

Given the investment horizon of 90 days Invesco BulletShares 2024 is expected to generate 0.04 times more return on investment than SSgA SPDR. However, Invesco BulletShares 2024 is 26.75 times less risky than SSgA SPDR. It trades about 0.6 of its potential returns per unit of risk. SSgA SPDR ETFs is currently generating about -0.1 per unit of risk. If you would invest  2,091  in Invesco BulletShares 2024 on September 30, 2024 and sell it today you would earn a total of  21.00  from holding Invesco BulletShares 2024 or generate 1.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	89.06%
Values	Daily Returns

Invesco BulletShares 2024  vs.  SSgA SPDR ETFs

Invesco BulletShares 2024

Risk-Adjusted Performance

0 of 100

Excellent

Over the last 90 days Invesco BulletShares 2024 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Invesco BulletShares is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

SSgA SPDR ETFs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SSgA SPDR ETFs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, SSgA SPDR is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Invesco BulletShares and SSgA SPDR

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

The idea behind Invesco BulletShares 2024 and SSgA SPDR ETFs 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.