Correlation Between IShares Financials and Invesco KBW

Can any of the company-specific risk be diversified away by investing in both IShares Financials and Invesco KBW 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 IShares Financials and Invesco KBW into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares Financials ETF and Invesco KBW Property, you can compare the effects of market volatilities on IShares Financials and Invesco KBW 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 IShares Financials with a short position of Invesco KBW. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Financials and Invesco KBW.

Diversification Opportunities for IShares Financials and Invesco KBW

0.0

Correlation Coefficient

IShares Financials  Invesco KBW

Pay attention - limited upside

The 3 months correlation between IShares and Invesco is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Financials ETF and Invesco KBW Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco KBW Property and IShares Financials 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 iShares Financials ETF are associated (or correlated) with Invesco KBW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco KBW Property has no effect on the direction of IShares Financials i.e., IShares Financials and Invesco KBW go up and down completely randomly.

Pair Corralation between IShares Financials and Invesco KBW

If you would invest  11,187  in iShares Financials ETF on May 4, 2025 and sell it today you would earn a total of  802.00  from holding iShares Financials ETF or generate 7.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

iShares Financials ETF  vs.  Invesco KBW Property

iShares Financials ETF

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Financials ETF are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, IShares Financials may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Invesco KBW Property

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco KBW Property has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Invesco KBW is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with IShares Financials and Invesco KBW

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

The idea behind iShares Financials ETF and Invesco KBW Property 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.