Correlation Between Invesco Convertible and Absolute Convertible
Can any of the company-specific risk be diversified away by investing in both Invesco Convertible and Absolute Convertible 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 Convertible and Absolute Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Vertible Securities and Absolute Convertible Arbitrage, you can compare the effects of market volatilities on Invesco Convertible and Absolute Convertible 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 Convertible with a short position of Absolute Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Convertible and Absolute Convertible.
Diversification Opportunities for Invesco Convertible and Absolute Convertible
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and Absolute is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Vertible Securities and Absolute Convertible Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Convertible and Invesco Convertible 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 Vertible Securities are associated (or correlated) with Absolute Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Convertible has no effect on the direction of Invesco Convertible i.e., Invesco Convertible and Absolute Convertible go up and down completely randomly.
Pair Corralation between Invesco Convertible and Absolute Convertible
Assuming the 90 days horizon Invesco Vertible Securities is expected to generate 11.92 times more return on investment than Absolute Convertible. However, Invesco Convertible is 11.92 times more volatile than Absolute Convertible Arbitrage. It trades about 0.4 of its potential returns per unit of risk. Absolute Convertible Arbitrage is currently generating about 0.44 per unit of risk. If you would invest 2,397 in Invesco Vertible Securities on August 28, 2024 and sell it today you would earn a total of 121.00 from holding Invesco Vertible Securities or generate 5.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Invesco Vertible Securities vs. Absolute Convertible Arbitrage
Performance |
| Timeline |
| Invesco Vertible Sec |
| Absolute Convertible |
Invesco Convertible and Absolute Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Convertible and Absolute Convertible
The main advantage of trading using opposite Invesco Convertible and Absolute Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Convertible position performs unexpectedly, Absolute Convertible 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 Absolute Convertible will offset losses from the drop in Absolute Convertible's long position.The idea behind Invesco Vertible Securities and Absolute Convertible Arbitrage 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.
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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