Correlation Between Invesco China and Rayliant Quantamental
Can any of the company-specific risk be diversified away by investing in both Invesco China and Rayliant Quantamental 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 Rayliant Quantamental 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 Rayliant Quantamental China, you can compare the effects of market volatilities on Invesco China and Rayliant Quantamental 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 Rayliant Quantamental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco China and Rayliant Quantamental.
Diversification Opportunities for Invesco China and Rayliant Quantamental
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and Rayliant is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Invesco China Technology and Rayliant Quantamental China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rayliant Quantamental 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 Rayliant Quantamental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rayliant Quantamental has no effect on the direction of Invesco China i.e., Invesco China and Rayliant Quantamental go up and down completely randomly.
Pair Corralation between Invesco China and Rayliant Quantamental
Given the investment horizon of 90 days Invesco China Technology is expected to generate 1.44 times more return on investment than Rayliant Quantamental. However, Invesco China is 1.44 times more volatile than Rayliant Quantamental China. It trades about 0.18 of its potential returns per unit of risk. Rayliant Quantamental China is currently generating about 0.05 per unit of risk. If you would invest 3,938 in Invesco China Technology on November 1, 2024 and sell it today you would earn a total of 245.00 from holding Invesco China Technology or generate 6.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco China Technology vs. Rayliant Quantamental China
Performance |
| Timeline |
| Invesco China Technology |
| Rayliant Quantamental |
Invesco China and Rayliant Quantamental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco China and Rayliant Quantamental
The main advantage of trading using opposite Invesco China and Rayliant Quantamental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco China position performs unexpectedly, Rayliant Quantamental 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 Rayliant Quantamental will offset losses from the drop in Rayliant Quantamental'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 |
| Rayliant Quantamental vs. iShares MSCI China | Rayliant Quantamental vs. Franklin FTSE China | Rayliant Quantamental vs. Simplify Exchange Traded |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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