Correlation Between Altus Power and Invesco SP

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Can any of the company-specific risk be diversified away by investing in both Altus Power and Invesco 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 Altus Power and Invesco SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altus Power and Invesco SP 500, you can compare the effects of market volatilities on Altus Power and Invesco 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 Altus Power with a short position of Invesco SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altus Power and Invesco SP.

Diversification Opportunities for Altus Power and Invesco SP

-0.59
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Altus and Invesco is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Altus Power and Invesco SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP 500 and Altus Power 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 Altus Power are associated (or correlated) with Invesco SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP 500 has no effect on the direction of Altus Power i.e., Altus Power and Invesco SP go up and down completely randomly.

Pair Corralation between Altus Power and Invesco SP

Given the investment horizon of 90 days Altus Power is expected to under-perform the Invesco SP. In addition to that, Altus Power is 3.56 times more volatile than Invesco SP 500. It trades about -0.01 of its total potential returns per unit of risk. Invesco SP 500 is currently generating about -0.01 per unit of volatility. If you would invest  15,676  in Invesco SP 500 on September 3, 2022 and sell it today you would lose (809.50)  from holding Invesco SP 500 or give up 5.16% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy99.6%
ValuesDaily Returns

Altus Power  vs.  Invesco SP 500

 Performance (%) 
       Timeline  
Altus Power 
Altus Performance
0 of 100
Over the last 90 days Altus Power has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Etf's basic indicators remain relatively invariable which may send shares a bit higher in January 2023. The latest agitation may also be a sign of long-running up-swing for the ETF retail investors.

Altus Price Channel

Invesco SP 500 
Invesco Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Invesco SP 500 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very sluggish basic indicators, Invesco SP may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Invesco Price Channel

Altus Power and Invesco SP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Altus Power and Invesco SP

The main advantage of trading using opposite Altus Power and Invesco SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altus Power position performs unexpectedly, Invesco 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 Invesco SP will offset losses from the drop in Invesco SP's long position.
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The idea behind Altus Power and Invesco SP 500 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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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 ETF Directory module to find actively traded Exchange Traded Funds (ETF) from around the world.

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