Correlation Between First Trust and Invesco
Can any of the company-specific risk be diversified away by investing in both First Trust and Invesco 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 First Trust and Invesco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Multi and Invesco, you can compare the effects of market volatilities on First Trust and Invesco 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 First Trust with a short position of Invesco. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Invesco.
Diversification Opportunities for First Trust and Invesco
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Invesco is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Multi and Invesco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco and First Trust 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 First Trust Multi are associated (or correlated) with Invesco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco has no effect on the direction of First Trust i.e., First Trust and Invesco go up and down completely randomly.
Pair Corralation between First Trust and Invesco
Considering the 90-day investment horizon First Trust Multi is expected to generate 1.78 times more return on investment than Invesco. However, First Trust is 1.78 times more volatile than Invesco. It trades about 0.12 of its potential returns per unit of risk. Invesco is currently generating about 0.16 per unit of risk. If you would invest 9,625 in First Trust Multi on August 29, 2024 and sell it today you would earn a total of 5,325 from holding First Trust Multi or generate 55.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 13.74% |
| Values | Daily Returns |
First Trust Multi vs. Invesco
Performance |
| Timeline |
| First Trust Multi |
| Invesco |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
First Trust and Invesco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Invesco
The main advantage of trading using opposite First Trust and Invesco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Invesco 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 will offset losses from the drop in Invesco's long position.| First Trust vs. First Trust Multi | First Trust vs. First Trust Small | First Trust vs. First Trust Large | First Trust vs. First Trust Large |
| Invesco vs. Invesco Zacks Mid Cap | Invesco vs. Invesco SP Spin Off | Invesco vs. Invesco Zacks Multi Asset | Invesco vs. Invesco SP 500 |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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