Correlation Between Invesco Senior and First Trust
Can any of the company-specific risk be diversified away by investing in both Invesco Senior and First Trust 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 Senior and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Senior Loan and First Trust Senior, you can compare the effects of market volatilities on Invesco Senior and First Trust 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 Senior with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Senior and First Trust.
Diversification Opportunities for Invesco Senior and First Trust
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and First is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Senior Loan and First Trust Senior in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Senior and Invesco Senior 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 Senior Loan are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Senior has no effect on the direction of Invesco Senior i.e., Invesco Senior and First Trust go up and down completely randomly.
Pair Corralation between Invesco Senior and First Trust
Given the investment horizon of 90 days Invesco Senior is expected to generate 1.02 times less return on investment than First Trust. In addition to that, Invesco Senior is 1.71 times more volatile than First Trust Senior. It trades about 0.11 of its total potential returns per unit of risk. First Trust Senior is currently generating about 0.19 per unit of volatility. If you would invest 4,618 in First Trust Senior on November 18, 2024 and sell it today you would earn a total of 9.00 from holding First Trust Senior or generate 0.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Senior Loan vs. First Trust Senior
Performance |
| Timeline |
| Invesco Senior Loan |
| First Trust Senior |
Invesco Senior and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Senior and First Trust
The main advantage of trading using opposite Invesco Senior and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Senior position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Invesco Senior vs. VanEck Vectors Moodys | Invesco Senior vs. BondBloxx ETF Trust | Invesco Senior vs. Vanguard ESG Corporate | Invesco Senior vs. Pacer Cash Cows |
| First Trust vs. First Trust Tactical | First Trust vs. First Trust Low | First Trust vs. First Trust Enhanced | First Trust vs. First Trust Managed |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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