Correlation Between Invesco Actively and First Trust
Can any of the company-specific risk be diversified away by investing in both Invesco Actively and First Trust 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 Actively and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Actively Managed and First Trust Bloomberg, you can compare the effects of market volatilities on Invesco Actively and First Trust 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 Actively with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Actively and First Trust.
Diversification Opportunities for Invesco Actively and First Trust
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and First is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Actively Managed and First Trust Bloomberg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Bloomberg and Invesco Actively 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 Actively Managed are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Bloomberg has no effect on the direction of Invesco Actively i.e., Invesco Actively and First Trust go up and down completely randomly.
Pair Corralation between Invesco Actively and First Trust
Given the investment horizon of 90 days Invesco Actively is expected to generate 2.48 times less return on investment than First Trust. But when comparing it to its historical volatility, Invesco Actively Managed is 1.06 times less risky than First Trust. It trades about 0.04 of its potential returns per unit of risk. First Trust Bloomberg is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,901 in First Trust Bloomberg on December 16, 2024 and sell it today you would earn a total of 1,105 from holding First Trust Bloomberg or generate 38.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 34.22% |
| Values | Daily Returns |
Invesco Actively Managed vs. First Trust Bloomberg
Performance |
| Timeline |
| Invesco Actively Managed |
| First Trust Bloomberg |
Invesco Actively and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Actively and First Trust
The main advantage of trading using opposite Invesco Actively and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Actively position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Invesco Actively vs. Harbor ETF Trust | ||
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| Invesco Actively vs. Xtrackers MSCI Emerging |
| First Trust vs. Invesco Actively Managed | ||
| First Trust vs. Harbor ETF Trust | ||
| First Trust vs. Harbor ETF Trust | ||
| First Trust vs. iShares Trust |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |
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