Correlation Between First Trust and Invesco Actively
Can any of the company-specific risk be diversified away by investing in both First Trust and Invesco Actively 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 Actively into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Municipal and Invesco Actively Managed, you can compare the effects of market volatilities on First Trust and Invesco Actively 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 Actively. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Invesco Actively.
Diversification Opportunities for First Trust and Invesco Actively
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Invesco is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Municipal and Invesco Actively Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Actively Managed 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 Municipal are associated (or correlated) with Invesco Actively. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Actively Managed has no effect on the direction of First Trust i.e., First Trust and Invesco Actively go up and down completely randomly.
Pair Corralation between First Trust and Invesco Actively
Given the investment horizon of 90 days First Trust is expected to generate 1.29 times less return on investment than Invesco Actively. In addition to that, First Trust is 1.41 times more volatile than Invesco Actively Managed. It trades about 0.07 of its total potential returns per unit of risk. Invesco Actively Managed is currently generating about 0.12 per unit of volatility. If you would invest 5,098 in Invesco Actively Managed on November 4, 2024 and sell it today you would earn a total of 22.00 from holding Invesco Actively Managed or generate 0.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Municipal vs. Invesco Actively Managed
Performance |
| Timeline |
| First Trust Municipal |
| Invesco Actively Managed |
First Trust and Invesco Actively Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Invesco Actively
The main advantage of trading using opposite First Trust and Invesco Actively positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Invesco Actively 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 Actively will offset losses from the drop in Invesco Actively's long position.| First Trust vs. SSGA Active Trust | First Trust vs. SPDR Nuveen Municipal | First Trust vs. iShares Short Maturity | First Trust vs. First Trust Flexible |
| Invesco Actively vs. SSGA Active Trust | Invesco Actively vs. SPDR Nuveen Municipal | Invesco Actively vs. iShares Short Maturity | Invesco Actively vs. First Trust Flexible |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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