Correlation Between Eic Value and Invesco Technology
Can any of the company-specific risk be diversified away by investing in both Eic Value and Invesco Technology 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 Eic Value and Invesco Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eic Value Fund and Invesco Technology Fund, you can compare the effects of market volatilities on Eic Value and Invesco Technology 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 Eic Value with a short position of Invesco Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eic Value and Invesco Technology.
Diversification Opportunities for Eic Value and Invesco Technology
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eic and Invesco is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Eic Value Fund and Invesco Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Technology and Eic Value 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 Eic Value Fund are associated (or correlated) with Invesco Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Technology has no effect on the direction of Eic Value i.e., Eic Value and Invesco Technology go up and down completely randomly.
Pair Corralation between Eic Value and Invesco Technology
Assuming the 90 days horizon Eic Value is expected to generate 8.41 times less return on investment than Invesco Technology. But when comparing it to its historical volatility, Eic Value Fund is 2.43 times less risky than Invesco Technology. It trades about 0.05 of its potential returns per unit of risk. Invesco Technology Fund is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 6,570 in Invesco Technology Fund on September 13, 2024 and sell it today you would earn a total of 685.00 from holding Invesco Technology Fund or generate 10.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eic Value Fund vs. Invesco Technology Fund
Performance |
| Timeline |
| Eic Value Fund |
| Invesco Technology |
Eic Value and Invesco Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eic Value and Invesco Technology
The main advantage of trading using opposite Eic Value and Invesco Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eic Value position performs unexpectedly, Invesco Technology 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 Technology will offset losses from the drop in Invesco Technology's long position.| Eic Value vs. Aqr Long Short Equity | Eic Value vs. Franklin Federal Limited Term | Eic Value vs. Lord Abbett Short | Eic Value vs. Siit Ultra Short |
| Invesco Technology vs. Commonwealth Global Fund | Invesco Technology vs. Issachar Fund Class | Invesco Technology vs. Ab Small Cap | Invesco Technology vs. Eic Value Fund |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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