Correlation Between Invesco SP and Natixis ETF

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

Diversification Opportunities for Invesco SP and Natixis ETF

0.95

Correlation Coefficient

Invesco SP  Natixis ETF

Almost no diversification

The 3 months correlation between Invesco and Natixis is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Invesco SP 500 and Natixis ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natixis ETF Trust 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 Natixis ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natixis ETF Trust has no effect on the direction of Invesco SP i.e., Invesco SP and Natixis ETF go up and down completely randomly.

Pair Corralation between Invesco SP and Natixis ETF

Given the investment horizon of 90 days Invesco SP 500 is expected to generate 0.64 times more return on investment than Natixis ETF. However, Invesco SP 500 is 1.55 times less risky than Natixis ETF. It trades about -0.24 of its potential returns per unit of risk. Natixis ETF Trust is currently generating about -0.21 per unit of risk. If you would invest  4,258  in Invesco SP 500 on January 30, 2024 and sell it today you would lose (124.90) from holding Invesco SP 500 or give up 2.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

Invesco SP 500  vs.  Natixis ETF Trust

Invesco SP 500

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco SP 500 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable primary indicators, Invesco SP is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Natixis ETF Trust

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Natixis ETF Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, Natixis ETF is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Invesco SP and Natixis ETF

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

The idea behind Invesco SP 500 and Natixis ETF Trust 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 CEOs Directory module to screen CEOs from public companies around the world.