Correlation Between First Trust and Invesco Senior
Can any of the company-specific risk be diversified away by investing in both First Trust and Invesco Senior 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 Senior into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Senior and Invesco Senior Loan, you can compare the effects of market volatilities on First Trust and Invesco Senior 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 Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Invesco Senior.
Diversification Opportunities for First Trust and Invesco Senior
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Invesco is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Senior and Invesco Senior Loan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Senior Loan 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 Senior are associated (or correlated) with Invesco Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Senior Loan has no effect on the direction of First Trust i.e., First Trust and Invesco Senior go up and down completely randomly.
Pair Corralation between First Trust and Invesco Senior
Given the investment horizon of 90 days First Trust Senior is expected to generate 0.58 times more return on investment than Invesco Senior. However, First Trust Senior is 1.71 times less risky than Invesco Senior. It trades about 0.19 of its potential returns per unit of risk. Invesco Senior Loan is currently generating about 0.11 per unit of risk. If you would invest 4,618 in First Trust Senior on November 18, 2024 and sell it today you would earn a total of 9.00 from holding First Trust Senior or generate 0.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Senior vs. Invesco Senior Loan
Performance |
| Timeline |
| First Trust Senior |
| Invesco Senior Loan |
First Trust and Invesco Senior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Invesco Senior
The main advantage of trading using opposite First Trust and Invesco Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Invesco Senior 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 Senior will offset losses from the drop in Invesco Senior's long position.| First Trust vs. First Trust Tactical | First Trust vs. First Trust Low | First Trust vs. First Trust Enhanced | First Trust vs. First Trust Managed |
| Invesco Senior vs. VanEck Vectors Moodys | Invesco Senior vs. BondBloxx ETF Trust | Invesco Senior vs. Vanguard ESG Corporate | Invesco Senior vs. Pacer Cash Cows |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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