Correlation Between IShares Genomics and Invesco SP

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

By analyzing existing cross correlation between iShares Genomics Immunology and Invesco SP SmallCap, you can compare the effects of market volatilities on IShares Genomics 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 IShares Genomics with a short position of Invesco SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Genomics and Invesco SP.

Diversification Opportunities for IShares Genomics and Invesco SP

0.05

Correlation Coefficient

IShares Genomics  Invesco SP

Significant diversification

The 3 months correlation between IShares and Invesco is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding iShares Genomics Immunology and Invesco SP SmallCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP SmallCap and IShares Genomics 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 iShares Genomics Immunology 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 SmallCap has no effect on the direction of IShares Genomics i.e., IShares Genomics and Invesco SP go up and down completely randomly.

Pair Corralation between IShares Genomics and Invesco SP

Given the investment horizon of 90 days iShares Genomics Immunology is expected to under-perform the Invesco SP. But the etf apears to be less risky and, when comparing its historical volatility, iShares Genomics Immunology is 1.23 times less risky than Invesco SP. The etf trades about -0.07 of its potential returns per unit of risk. The Invesco SP SmallCap is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  4,584  in Invesco SP SmallCap on September 14, 2024 and sell it today you would earn a total of  480.21  from holding Invesco SP SmallCap or generate 10.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

iShares Genomics Immunology  vs.  Invesco SP SmallCap

iShares Genomics Imm

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Genomics Immunology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, IShares Genomics is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Invesco SP SmallCap

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco SP SmallCap are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent fundamental indicators, Invesco SP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IShares Genomics and Invesco SP

The main advantage of trading using opposite IShares Genomics and Invesco SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Genomics 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.

The idea behind iShares Genomics Immunology and Invesco SP SmallCap 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.