Correlation Between Invesco FTSE and DBX ETF
Can any of the company-specific risk be diversified away by investing in both Invesco FTSE and DBX ETF 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 DBX ETF 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 DBX ETF Trust, you can compare the effects of market volatilities on Invesco FTSE and DBX ETF 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 DBX ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco FTSE and DBX ETF.
Diversification Opportunities for Invesco FTSE and DBX ETF
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and DBX is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Invesco FTSE RAFI and DBX ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DBX ETF Trust 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 DBX ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DBX ETF Trust has no effect on the direction of Invesco FTSE i.e., Invesco FTSE and DBX ETF go up and down completely randomly.
Pair Corralation between Invesco FTSE and DBX ETF
Considering the 90-day investment horizon Invesco FTSE RAFI is expected to generate 1.09 times more return on investment than DBX ETF. However, Invesco FTSE is 1.09 times more volatile than DBX ETF Trust. It trades about -0.06 of its potential returns per unit of risk. DBX ETF Trust is currently generating about -0.14 per unit of risk. If you would invest 1,923 in Invesco FTSE RAFI on January 19, 2024 and sell it today you would lose (21.00) from holding Invesco FTSE RAFI or give up 1.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco FTSE RAFI vs. DBX ETF Trust
Performance |
| Timeline |
| Invesco FTSE RAFI |
| DBX ETF Trust |
Invesco FTSE and DBX ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco FTSE and DBX ETF
The main advantage of trading using opposite Invesco FTSE and DBX ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco FTSE position performs unexpectedly, DBX ETF 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 DBX ETF will offset losses from the drop in DBX ETF'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 DWA Emerging |
| DBX ETF vs. Xtrackers MSCI EAFE | DBX ETF vs. SPDR MSCI Emerging | DBX ETF vs. NuShares ETF Trust | DBX ETF vs. Xtrackers MSCI USA |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| AI Investment Finder Use AI to screen and filter profitable investment opportunities | |
| Stocks Directory Find actively traded stocks across global markets | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |