Correlation Between BFIT and Invesco Global
Can any of the company-specific risk be diversified away by investing in both BFIT and Invesco Global 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 BFIT and Invesco Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BFIT and Invesco Global Listed, you can compare the effects of market volatilities on BFIT and Invesco Global 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 BFIT with a short position of Invesco Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of BFIT and Invesco Global.
Diversification Opportunities for BFIT and Invesco Global
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BFIT and Invesco is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding BFIT and Invesco Global Listed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Global Listed and BFIT 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 BFIT are associated (or correlated) with Invesco Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Global Listed has no effect on the direction of BFIT i.e., BFIT and Invesco Global go up and down completely randomly.
Pair Corralation between BFIT and Invesco Global
Given the investment horizon of 90 days BFIT is expected to generate 2.28 times less return on investment than Invesco Global. But when comparing it to its historical volatility, BFIT is 1.07 times less risky than Invesco Global. It trades about 0.04 of its potential returns per unit of risk. Invesco Global Listed is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,480 in Invesco Global Listed on August 23, 2024 and sell it today you would earn a total of 2,555 from holding Invesco Global Listed or generate 57.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 32.26% |
| Values | Daily Returns |
BFIT vs. Invesco Global Listed
Performance |
| Timeline |
| BFIT |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Invesco Global Listed |
BFIT and Invesco Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BFIT and Invesco Global
The main advantage of trading using opposite BFIT and Invesco Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BFIT position performs unexpectedly, Invesco Global 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 Global will offset losses from the drop in Invesco Global's long position.The idea behind BFIT and Invesco Global Listed pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Invesco Global vs. Invesco WilderHill Clean | Invesco Global vs. First Trust Global | Invesco Global vs. First Trust NASDAQ | Invesco Global vs. ALPS Clean Energy |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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