Correlation Between Main Sector and Invesco Water
Can any of the company-specific risk be diversified away by investing in both Main Sector and Invesco Water 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 Main Sector and Invesco Water into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Main Sector Rotation and Invesco Water Resources, you can compare the effects of market volatilities on Main Sector and Invesco Water 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 Main Sector with a short position of Invesco Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Sector and Invesco Water.
Diversification Opportunities for Main Sector and Invesco Water
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Main and Invesco is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Main Sector Rotation and Invesco Water Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Water Resources and Main Sector 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 Main Sector Rotation are associated (or correlated) with Invesco Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Water Resources has no effect on the direction of Main Sector i.e., Main Sector and Invesco Water go up and down completely randomly.
Pair Corralation between Main Sector and Invesco Water
Given the investment horizon of 90 days Main Sector Rotation is expected to generate 0.88 times more return on investment than Invesco Water. However, Main Sector Rotation is 1.14 times less risky than Invesco Water. It trades about 0.12 of its potential returns per unit of risk. Invesco Water Resources is currently generating about 0.01 per unit of risk. If you would invest 5,971 in Main Sector Rotation on August 31, 2025 and sell it today you would earn a total of 378.00 from holding Main Sector Rotation or generate 6.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Main Sector Rotation vs. Invesco Water Resources
Performance |
| Timeline |
| Main Sector Rotation |
| Invesco Water Resources |
Main Sector and Invesco Water Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Main Sector and Invesco Water
The main advantage of trading using opposite Main Sector and Invesco Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Sector position performs unexpectedly, Invesco Water 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 Water will offset losses from the drop in Invesco Water's long position.| Main Sector vs. Strategy Shares | Main Sector vs. Freedom Day Dividend | Main Sector vs. Franklin Templeton ETF | Main Sector vs. iShares MSCI China |
| Invesco Water vs. First Trust Indxx | Invesco Water vs. Direxion Daily Industrials | Invesco Water vs. Themes Transatlantic Defense | Invesco Water vs. FlexShares STOXX Global |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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