Correlation Between Invesco FTSE and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Invesco FTSE and SPDR 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 Invesco FTSE and SPDR SP 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 SPDR SP International, you can compare the effects of market volatilities on Invesco FTSE and SPDR 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 Invesco FTSE with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco FTSE and SPDR SP.
Diversification Opportunities for Invesco FTSE and SPDR SP
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Invesco and SPDR is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Invesco FTSE RAFI and SPDR SP International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP International 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP International has no effect on the direction of Invesco FTSE i.e., Invesco FTSE and SPDR SP go up and down completely randomly.
Pair Corralation between Invesco FTSE and SPDR SP
Considering the 90-day investment horizon Invesco FTSE RAFI is expected to generate 1.3 times more return on investment than SPDR SP. However, Invesco FTSE is 1.3 times more volatile than SPDR SP International. It trades about 0.07 of its potential returns per unit of risk. SPDR SP International is currently generating about 0.08 per unit of risk. If you would invest 4,213 in Invesco FTSE RAFI on March 26, 2025 and sell it today you would earn a total of 1,421 from holding Invesco FTSE RAFI or generate 33.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco FTSE RAFI vs. SPDR SP International
Performance |
| Timeline |
| Invesco FTSE RAFI |
| SPDR SP International |
Invesco FTSE and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco FTSE and SPDR SP
The main advantage of trading using opposite Invesco FTSE and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco FTSE position performs unexpectedly, SPDR 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 SPDR SP will offset losses from the drop in SPDR SP's long position.| Invesco FTSE vs. Invesco FTSE RAFI | Invesco FTSE vs. Invesco FTSE RAFI | Invesco FTSE vs. Invesco FTSE RAFI | Invesco FTSE vs. Invesco FTSE RAFI |
| SPDR SP vs. SPDR SP Emerging | SPDR SP vs. iShares International Select | SPDR SP vs. First Trust Dow | SPDR SP vs. Invesco International Dividend |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |