Correlation Between Elcom International and Invesco Technology
Can any of the company-specific risk be diversified away by investing in both Elcom International 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 Elcom International and Invesco Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elcom International and Invesco Technology Fund, you can compare the effects of market volatilities on Elcom International 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 Elcom International with a short position of Invesco Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elcom International and Invesco Technology.
Diversification Opportunities for Elcom International and Invesco Technology
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Elcom and Invesco is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Elcom International and Invesco Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Technology and Elcom International 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 Elcom International 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 Elcom International i.e., Elcom International and Invesco Technology go up and down completely randomly.
Pair Corralation between Elcom International and Invesco Technology
Given the investment horizon of 90 days Elcom International is expected to under-perform the Invesco Technology. But the pink sheet apears to be less risky and, when comparing its historical volatility, Elcom International is 1.09 times less risky than Invesco Technology. The pink sheet trades about -0.15 of its potential returns per unit of risk. The Invesco Technology Fund is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,897 in Invesco Technology Fund on August 27, 2024 and sell it today you would earn a total of 3,492 from holding Invesco Technology Fund or generate 89.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 9.27% |
| Values | Daily Returns |
Elcom International vs. Invesco Technology Fund
Performance |
| Timeline |
| Elcom International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Invesco Technology |
Elcom International and Invesco Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elcom International and Invesco Technology
The main advantage of trading using opposite Elcom International and Invesco Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elcom International 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.| Elcom International vs. NuGene International | Elcom International vs. Zoom Video Communications | Elcom International vs. Bowmo Inc | Elcom International vs. Epazz Inc |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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