Correlation Between Carlyle and Invesco Value
Can any of the company-specific risk be diversified away by investing in both Carlyle and Invesco Value 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 Carlyle and Invesco Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carlyle Group and Invesco Value Municipal, you can compare the effects of market volatilities on Carlyle and Invesco Value 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 Carlyle with a short position of Invesco Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlyle and Invesco Value.
Diversification Opportunities for Carlyle and Invesco Value
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Carlyle and Invesco is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group and Invesco Value Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Value Municipal and Carlyle 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 Carlyle Group are associated (or correlated) with Invesco Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Value Municipal has no effect on the direction of Carlyle i.e., Carlyle and Invesco Value go up and down completely randomly.
Pair Corralation between Carlyle and Invesco Value
Allowing for the 90-day total investment horizon Carlyle Group is expected to generate 3.95 times more return on investment than Invesco Value. However, Carlyle is 3.95 times more volatile than Invesco Value Municipal. It trades about 0.07 of its potential returns per unit of risk. Invesco Value Municipal is currently generating about 0.08 per unit of risk. If you would invest 3,932 in Carlyle Group on August 29, 2024 and sell it today you would earn a total of 1,354 from holding Carlyle Group or generate 34.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carlyle Group vs. Invesco Value Municipal
Performance |
| Timeline |
| Carlyle Group |
| Invesco Value Municipal |
Carlyle and Invesco Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carlyle and Invesco Value
The main advantage of trading using opposite Carlyle and Invesco Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlyle position performs unexpectedly, Invesco Value 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 Value will offset losses from the drop in Invesco Value's long position.The idea behind Carlyle Group and Invesco Value Municipal 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 Value vs. Invesco Municipal Income | Invesco Value vs. DWS Municipal Income | Invesco Value vs. MFS Municipal Income | Invesco Value vs. MFS High Income |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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