Correlation Between Invesco SP and Invesco Dynamic

Can any of the company-specific risk be diversified away by investing in both Invesco SP and Invesco Dynamic 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 Invesco Dynamic 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 Invesco Dynamic Leisure, you can compare the effects of market volatilities on Invesco SP and Invesco Dynamic 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 Invesco Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco SP and Invesco Dynamic.

Diversification Opportunities for Invesco SP and Invesco Dynamic

-0.49

Correlation Coefficient

Invesco SP  Invesco Dynamic

Very good diversification

The 3 months correlation between Invesco and Invesco is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Invesco SP 500 and Invesco Dynamic Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Dynamic Leisure 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 Invesco Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Dynamic Leisure has no effect on the direction of Invesco SP i.e., Invesco SP and Invesco Dynamic go up and down completely randomly.

Pair Corralation between Invesco SP and Invesco Dynamic

Considering the 90-day investment horizon Invesco SP 500 is expected to under-perform the Invesco Dynamic. But the etf apears to be less risky and, when comparing its historical volatility, Invesco SP 500 is 1.35 times less risky than Invesco Dynamic. The etf trades about -0.52 of its potential returns per unit of risk. The Invesco Dynamic Leisure is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  5,360  in Invesco Dynamic Leisure on September 23, 2024 and sell it today you would lose (119.00) from holding Invesco Dynamic Leisure or give up 2.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Invesco SP 500  vs.  Invesco Dynamic Leisure

Invesco SP 500

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Invesco Dynamic Leisure

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Dynamic Leisure are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical and fundamental indicators, Invesco Dynamic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Invesco SP and Invesco Dynamic

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

The idea behind Invesco SP 500 and Invesco Dynamic Leisure 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.