Correlation Between World Energy and Invesco Energy
Can any of the company-specific risk be diversified away by investing in both World Energy and Invesco Energy 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 World Energy and Invesco Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between World Energy Fund and Invesco Energy Fund, you can compare the effects of market volatilities on World Energy and Invesco Energy 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 World Energy with a short position of Invesco Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Energy and Invesco Energy.
Diversification Opportunities for World Energy and Invesco Energy
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between World and Invesco is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding World Energy Fund and Invesco Energy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Energy and World Energy 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 World Energy Fund are associated (or correlated) with Invesco Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Energy has no effect on the direction of World Energy i.e., World Energy and Invesco Energy go up and down completely randomly.
Pair Corralation between World Energy and Invesco Energy
Assuming the 90 days horizon World Energy Fund is expected to generate 1.1 times more return on investment than Invesco Energy. However, World Energy is 1.1 times more volatile than Invesco Energy Fund. It trades about 0.03 of its potential returns per unit of risk. Invesco Energy Fund is currently generating about 0.02 per unit of risk. If you would invest 1,282 in World Energy Fund on November 2, 2024 and sell it today you would earn a total of 220.00 from holding World Energy Fund or generate 17.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
World Energy Fund vs. Invesco Energy Fund
Performance |
| Timeline |
| World Energy |
| Invesco Energy |
World Energy and Invesco Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Energy and Invesco Energy
The main advantage of trading using opposite World Energy and Invesco Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Energy position performs unexpectedly, Invesco Energy 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 Energy will offset losses from the drop in Invesco Energy's long position.| World Energy vs. Chartwell Short Duration | World Energy vs. Needham Aggressive Growth | World Energy vs. Lgm Risk Managed | World Energy vs. Siit High Yield |
| Invesco Energy vs. One Choice Portfolio | Invesco Energy vs. Ironclad Managed Risk | Invesco Energy vs. Rbc Bluebay Global | Invesco Energy vs. Barings High Yield |
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 Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |