Correlation Between Invesco High and Invesco Active
Can any of the company-specific risk be diversified away by investing in both Invesco High and Invesco Active 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 High and Invesco Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco High Yield and Invesco Active Allocation, you can compare the effects of market volatilities on Invesco High and Invesco Active 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 High with a short position of Invesco Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco High and Invesco Active.
Diversification Opportunities for Invesco High and Invesco Active
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Invesco and Invesco is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Invesco High Yield and Invesco Active Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Active Allocation and Invesco High 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 High Yield are associated (or correlated) with Invesco Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Active Allocation has no effect on the direction of Invesco High i.e., Invesco High and Invesco Active go up and down completely randomly.
Pair Corralation between Invesco High and Invesco Active
Assuming the 90 days horizon Invesco High is expected to generate 1.74 times less return on investment than Invesco Active. But when comparing it to its historical volatility, Invesco High Yield is 2.74 times less risky than Invesco Active. It trades about 0.15 of its potential returns per unit of risk. Invesco Active Allocation is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,311 in Invesco Active Allocation on August 29, 2024 and sell it today you would earn a total of 164.00 from holding Invesco Active Allocation or generate 12.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.52% |
| Values | Daily Returns |
Invesco High Yield vs. Invesco Active Allocation
Performance |
| Timeline |
| Invesco High Yield |
| Invesco Active Allocation |
Invesco High and Invesco Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco High and Invesco Active
The main advantage of trading using opposite Invesco High and Invesco Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco High position performs unexpectedly, Invesco Active 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 Active will offset losses from the drop in Invesco Active's long position.| Invesco High vs. Prudential High Yield | Invesco High vs. HUMANA INC | Invesco High vs. Aquagold International | Invesco High vs. Barloworld Ltd ADR |
| Invesco Active vs. Rbc Ultra Short Fixed | Invesco Active vs. Bbh Intermediate Municipal | Invesco Active vs. Ms Global Fixed | Invesco Active vs. Versatile Bond Portfolio |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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