Correlation Between Cornerstone Strategic and Invesco Active
Can any of the company-specific risk be diversified away by investing in both Cornerstone Strategic and Invesco Active 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 Cornerstone Strategic and Invesco Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cornerstone Strategic Return and Invesco Active Allocation, you can compare the effects of market volatilities on Cornerstone Strategic and Invesco Active 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 Cornerstone Strategic with a short position of Invesco Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornerstone Strategic and Invesco Active.
Diversification Opportunities for Cornerstone Strategic and Invesco Active
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cornerstone and Invesco is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Cornerstone Strategic Return and Invesco Active Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Active Allocation and Cornerstone Strategic 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 Cornerstone Strategic Return are associated (or correlated) with Invesco Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Active Allocation has no effect on the direction of Cornerstone Strategic i.e., Cornerstone Strategic and Invesco Active go up and down completely randomly.
Pair Corralation between Cornerstone Strategic and Invesco Active
Considering the 90-day investment horizon Cornerstone Strategic Return is expected to under-perform the Invesco Active. In addition to that, Cornerstone Strategic is 4.45 times more volatile than Invesco Active Allocation. It trades about -0.15 of its total potential returns per unit of risk. Invesco Active Allocation is currently generating about -0.01 per unit of volatility. If you would invest 1,385 in Invesco Active Allocation on November 27, 2024 and sell it today you would lose (2.00) from holding Invesco Active Allocation or give up 0.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Cornerstone Strategic Return vs. Invesco Active Allocation
Performance |
| Timeline |
| Cornerstone Strategic |
| Invesco Active Allocation |
Cornerstone Strategic and Invesco Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cornerstone Strategic and Invesco Active
The main advantage of trading using opposite Cornerstone Strategic and Invesco Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cornerstone Strategic position performs unexpectedly, Invesco Active 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 Active will offset losses from the drop in Invesco Active's long position.The idea behind Cornerstone Strategic Return and Invesco Active Allocation 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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