Correlation Between Small Cap and Invesco Comstock
Can any of the company-specific risk be diversified away by investing in both Small Cap and Invesco Comstock 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 Small Cap and Invesco Comstock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Growth and Invesco Stock Fund, you can compare the effects of market volatilities on Small Cap and Invesco Comstock 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 Small Cap with a short position of Invesco Comstock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Invesco Comstock.
Diversification Opportunities for Small Cap and Invesco Comstock
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SMALL and Invesco is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Growth and Invesco Stock Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Comstock and Small Cap 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 Small Cap Growth are associated (or correlated) with Invesco Comstock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Comstock has no effect on the direction of Small Cap i.e., Small Cap and Invesco Comstock go up and down completely randomly.
Pair Corralation between Small Cap and Invesco Comstock
Assuming the 90 days horizon Small Cap Growth is expected to generate 1.5 times more return on investment than Invesco Comstock. However, Small Cap is 1.5 times more volatile than Invesco Stock Fund. It trades about 0.07 of its potential returns per unit of risk. Invesco Stock Fund is currently generating about 0.09 per unit of risk. If you would invest 1,421 in Small Cap Growth on August 30, 2024 and sell it today you would earn a total of 598.00 from holding Small Cap Growth or generate 42.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Growth vs. Invesco Stock Fund
Performance |
| Timeline |
| Small Cap Growth |
| Invesco Comstock |
Small Cap and Invesco Comstock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Invesco Comstock
The main advantage of trading using opposite Small Cap and Invesco Comstock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Invesco Comstock 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 Comstock will offset losses from the drop in Invesco Comstock's long position.| Small Cap vs. Putnam Equity Income | Small Cap vs. Putnam Growth Opportunities | Small Cap vs. HUMANA INC | Small Cap vs. Aquagold International |
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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 the Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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