Correlation Between Invesco SP and SPDR MSCI

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

Diversification Opportunities for Invesco SP and SPDR MSCI

0.94

Correlation Coefficient

Invesco SP  SPDR MSCI

Almost no diversification

The 3 months correlation between Invesco and SPDR is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Invesco SP 500 and SPDR MSCI ACWI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR MSCI ACWI 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 SPDR MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR MSCI ACWI has no effect on the direction of Invesco SP i.e., Invesco SP and SPDR MSCI go up and down completely randomly.

Pair Corralation between Invesco SP and SPDR MSCI

Given the investment horizon of 90 days Invesco SP 500 is expected to generate 1.49 times more return on investment than SPDR MSCI. However, Invesco SP is 1.49 times more volatile than SPDR MSCI ACWI. It trades about 0.18 of its potential returns per unit of risk. SPDR MSCI ACWI is currently generating about 0.17 per unit of risk. If you would invest  9,833  in Invesco SP 500 on May 2, 2025 and sell it today you would earn a total of  1,061  from holding Invesco SP 500 or generate 10.79% return on investment over 90 days.

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

Invesco SP 500  vs.  SPDR MSCI ACWI

Invesco SP 500

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco SP 500 are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Invesco SP may actually be approaching a critical reversion point that can send shares even higher in August 2025.

SPDR MSCI ACWI

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR MSCI ACWI are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, SPDR MSCI may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Invesco SP and SPDR MSCI

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

The idea behind Invesco SP 500 and SPDR MSCI ACWI 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.