Correlation Between Invesco Dynamic and SPDR SP

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

Diversification Opportunities for Invesco Dynamic and SPDR SP

0.99

Correlation Coefficient

Invesco Dynamic  SPDR SP

No risk reduction

The 3 months correlation between Invesco and SPDR is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Dynamic Semiconductors and SPDR SP Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Semiconductor and Invesco Dynamic 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 Dynamic Semiconductors 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 Semiconductor has no effect on the direction of Invesco Dynamic i.e., Invesco Dynamic and SPDR SP go up and down completely randomly.

Pair Corralation between Invesco Dynamic and SPDR SP

Considering the 90-day investment horizon Invesco Dynamic is expected to generate 1.27 times less return on investment than SPDR SP. But when comparing it to its historical volatility, Invesco Dynamic Semiconductors is 1.04 times less risky than SPDR SP. It trades about 0.19 of its potential returns per unit of risk. SPDR SP Semiconductor is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  20,176  in SPDR SP Semiconductor on May 4, 2025 and sell it today you would earn a total of  5,993  from holding SPDR SP Semiconductor or generate 29.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Invesco Dynamic Semiconductors  vs.  SPDR SP Semiconductor

Invesco Dynamic Semi

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Dynamic Semiconductors are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Invesco Dynamic demonstrated solid returns over the last few months and may actually be approaching a breakup point.

SPDR SP Semiconductor

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP Semiconductor are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, SPDR SP exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Invesco Dynamic and SPDR SP

The main advantage of trading using opposite Invesco Dynamic and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Dynamic 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.

The idea behind Invesco Dynamic Semiconductors and SPDR SP Semiconductor 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.