Correlation Between Invesco China and Litman Gregory
Can any of the company-specific risk be diversified away by investing in both Invesco China and Litman Gregory 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 China and Litman Gregory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco China Technology and Litman Gregory Funds, you can compare the effects of market volatilities on Invesco China and Litman Gregory 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 China with a short position of Litman Gregory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco China and Litman Gregory.
Diversification Opportunities for Invesco China and Litman Gregory
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and Litman is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Invesco China Technology and Litman Gregory Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litman Gregory Funds and Invesco China 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 China Technology are associated (or correlated) with Litman Gregory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litman Gregory Funds has no effect on the direction of Invesco China i.e., Invesco China and Litman Gregory go up and down completely randomly.
Pair Corralation between Invesco China and Litman Gregory
Given the investment horizon of 90 days Invesco China Technology is expected to generate 1.27 times more return on investment than Litman Gregory. However, Invesco China is 1.27 times more volatile than Litman Gregory Funds. It trades about -0.04 of its potential returns per unit of risk. Litman Gregory Funds is currently generating about -0.12 per unit of risk. If you would invest 4,043 in Invesco China Technology on August 25, 2024 and sell it today you would lose (121.00) from holding Invesco China Technology or give up 2.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco China Technology vs. Litman Gregory Funds
Performance |
| Timeline |
| Invesco China Technology |
| Litman Gregory Funds |
Invesco China and Litman Gregory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco China and Litman Gregory
The main advantage of trading using opposite Invesco China and Litman Gregory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco China position performs unexpectedly, Litman Gregory 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 Litman Gregory will offset losses from the drop in Litman Gregory's long position.| Invesco China vs. KraneShares CSI China | Invesco China vs. iShares MSCI China | Invesco China vs. Global X MSCI | Invesco China vs. Xtrackers Harvest CSI |
| Litman Gregory vs. iShares MSCI Singapore | Litman Gregory vs. iShares MSCI Taiwan | Litman Gregory vs. iShares MSCI Malaysia | Litman Gregory vs. iShares MSCI Australia |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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