Correlation Between Invesco Asia and Invesco European
Can any of the company-specific risk be diversified away by investing in both Invesco Asia and Invesco 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 Asia and Invesco European into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Asia Pacific and Invesco European Growth, you can compare the effects of market volatilities on Invesco Asia and Invesco 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 Asia with a short position of Invesco European. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Asia and Invesco European.
Diversification Opportunities for Invesco Asia and Invesco European
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Invesco and Invesco is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Asia Pacific and Invesco European Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco European Growth and Invesco Asia 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 Asia Pacific are associated (or correlated) with Invesco European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco European Growth has no effect on the direction of Invesco Asia i.e., Invesco Asia and Invesco European go up and down completely randomly.
Pair Corralation between Invesco Asia and Invesco European
Assuming the 90 days horizon Invesco Asia Pacific is expected to generate 1.09 times more return on investment than Invesco European. However, Invesco Asia is 1.09 times more volatile than Invesco European Growth. It trades about 0.07 of its potential returns per unit of risk. Invesco European Growth is currently generating about -0.05 per unit of risk. If you would invest 2,774 in Invesco Asia Pacific on September 1, 2024 and sell it today you would earn a total of 211.00 from holding Invesco Asia Pacific or generate 7.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Asia Pacific vs. Invesco European Growth
Performance |
| Timeline |
| Invesco Asia Pacific |
| Invesco European Growth |
Invesco Asia and Invesco European Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Asia and Invesco European
The main advantage of trading using opposite Invesco Asia and Invesco European positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Asia position performs unexpectedly, Invesco 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 Invesco European will offset losses from the drop in Invesco European's long position.| Invesco Asia vs. Invesco Municipal Income | Invesco Asia vs. Invesco Municipal Income | Invesco Asia vs. Invesco Municipal Income | Invesco Asia vs. Oppenheimer Rising Dividends |
| Invesco European vs. Invesco Municipal Income | Invesco European vs. Invesco Municipal Income | Invesco European vs. Invesco Municipal Income | Invesco European vs. Oppenheimer Rising Dividends |
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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