Correlation Between Invesco European and Henderson European
Can any of the company-specific risk be diversified away by investing in both Invesco European and Henderson European 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 European and Henderson European into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco European Growth and Henderson European Focus, you can compare the effects of market volatilities on Invesco European and Henderson European 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 European with a short position of Henderson European. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco European and Henderson European.
Diversification Opportunities for Invesco European and Henderson European
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and Henderson is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Invesco European Growth and Henderson European Focus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henderson European Focus and Invesco European 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 European Growth are associated (or correlated) with Henderson European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henderson European Focus has no effect on the direction of Invesco European i.e., Invesco European and Henderson European go up and down completely randomly.
Pair Corralation between Invesco European and Henderson European
Assuming the 90 days horizon Invesco European Growth is expected to under-perform the Henderson European. But the mutual fund apears to be less risky and, when comparing its historical volatility, Invesco European Growth is 1.08 times less risky than Henderson European. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Henderson European Focus is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 4,465 in Henderson European Focus on September 2, 2024 and sell it today you would lose (83.00) from holding Henderson European Focus or give up 1.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco European Growth vs. Henderson European Focus
Performance |
| Timeline |
| Invesco European Growth |
| Henderson European Focus |
Invesco European and Henderson European Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco European and Henderson European
The main advantage of trading using opposite Invesco European and Henderson European positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco European position performs unexpectedly, Henderson European 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 Henderson European will offset losses from the drop in Henderson European's long position.| Invesco European vs. Ab Global Bond | Invesco European vs. Artisan High Income | Invesco European vs. Inflation Protected Bond Fund | Invesco European vs. Ab Bond Inflation |
| Henderson European vs. Invesco European Small | Henderson European vs. Invesco European Growth | Henderson European vs. Jpmorgan Intrepid European |
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 the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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