Correlation Between Invesco Emerging and Invesco Corporate
Can any of the company-specific risk be diversified away by investing in both Invesco Emerging and Invesco Corporate 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 Emerging and Invesco Corporate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Emerging Markets and Invesco Porate Bond, you can compare the effects of market volatilities on Invesco Emerging and Invesco Corporate 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 Emerging with a short position of Invesco Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Emerging and Invesco Corporate.
Diversification Opportunities for Invesco Emerging and Invesco Corporate
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and Invesco is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Emerging Markets and Invesco Porate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Porate Bond and Invesco Emerging 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 Emerging Markets are associated (or correlated) with Invesco Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Porate Bond has no effect on the direction of Invesco Emerging i.e., Invesco Emerging and Invesco Corporate go up and down completely randomly.
Pair Corralation between Invesco Emerging and Invesco Corporate
Assuming the 90 days horizon Invesco Emerging is expected to generate 6.46 times less return on investment than Invesco Corporate. In addition to that, Invesco Emerging is 1.42 times more volatile than Invesco Porate Bond. It trades about 0.01 of its total potential returns per unit of risk. Invesco Porate Bond is currently generating about 0.11 per unit of volatility. If you would invest 604.00 in Invesco Porate Bond on September 1, 2024 and sell it today you would earn a total of 28.00 from holding Invesco Porate Bond or generate 4.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Emerging Markets vs. Invesco Porate Bond
Performance |
| Timeline |
| Invesco Emerging Markets |
| Invesco Porate Bond |
Invesco Emerging and Invesco Corporate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Emerging and Invesco Corporate
The main advantage of trading using opposite Invesco Emerging and Invesco Corporate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Emerging position performs unexpectedly, Invesco Corporate 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 Corporate will offset losses from the drop in Invesco Corporate's long position.| Invesco Emerging vs. Invesco Municipal Income | Invesco Emerging vs. Invesco Municipal Income | Invesco Emerging vs. Invesco Municipal Income | Invesco Emerging vs. Oppenheimer Rising Dividends |
| Invesco Corporate vs. Invesco Municipal Income | Invesco Corporate vs. Invesco Municipal Income | Invesco Corporate vs. Invesco Municipal Income | Invesco Corporate vs. Oppenheimer Rising Dividends |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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