Correlation Between MicroSectors FANG and Invesco Variable
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and Invesco Variable 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 MicroSectors FANG and Invesco Variable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MicroSectors FANG Index and Invesco Variable Rate, you can compare the effects of market volatilities on MicroSectors FANG and Invesco Variable 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 MicroSectors FANG with a short position of Invesco Variable. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and Invesco Variable.
Diversification Opportunities for MicroSectors FANG and Invesco Variable
-0.92 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between MicroSectors and Invesco is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and Invesco Variable Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Variable Rate and MicroSectors FANG 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 MicroSectors FANG Index are associated (or correlated) with Invesco Variable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Variable Rate has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and Invesco Variable go up and down completely randomly.
Pair Corralation between MicroSectors FANG and Invesco Variable
Given the investment horizon of 90 days MicroSectors FANG Index is expected to under-perform the Invesco Variable. In addition to that, MicroSectors FANG is 106.66 times more volatile than Invesco Variable Rate. It trades about -0.07 of its total potential returns per unit of risk. Invesco Variable Rate is currently generating about 0.57 per unit of volatility. If you would invest 2,497 in Invesco Variable Rate on August 30, 2024 and sell it today you would earn a total of 12.00 from holding Invesco Variable Rate or generate 0.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MicroSectors FANG Index vs. Invesco Variable Rate
Performance |
| Timeline |
| MicroSectors FANG Index |
| Invesco Variable Rate |
MicroSectors FANG and Invesco Variable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and Invesco Variable
The main advantage of trading using opposite MicroSectors FANG and Invesco Variable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, Invesco Variable 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 Variable will offset losses from the drop in Invesco Variable's long position.| MicroSectors FANG vs. MicroSectors FANG Index | MicroSectors FANG vs. Direxion Daily Semiconductor | MicroSectors FANG vs. Direxion Daily Technology | MicroSectors FANG vs. Direxion Daily SP |
| Invesco Variable vs. iShares ESG 1 5 | Invesco Variable vs. First Trust Low | Invesco Variable vs. First Trust Managed | Invesco Variable vs. First Trust Enhanced |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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