Correlation Between Gotham Hedged and Invesco Technology
Can any of the company-specific risk be diversified away by investing in both Gotham Hedged and Invesco Technology 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 Gotham Hedged and Invesco Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gotham Hedged E and Invesco Technology Fund, you can compare the effects of market volatilities on Gotham Hedged and Invesco Technology 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 Gotham Hedged with a short position of Invesco Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gotham Hedged and Invesco Technology.
Diversification Opportunities for Gotham Hedged and Invesco Technology
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Gotham and Invesco is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Gotham Hedged E and Invesco Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Technology and Gotham Hedged 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 Gotham Hedged E are associated (or correlated) with Invesco Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Technology has no effect on the direction of Gotham Hedged i.e., Gotham Hedged and Invesco Technology go up and down completely randomly.
Pair Corralation between Gotham Hedged and Invesco Technology
Assuming the 90 days horizon Gotham Hedged is expected to generate 1.62 times less return on investment than Invesco Technology. But when comparing it to its historical volatility, Gotham Hedged E is 2.47 times less risky than Invesco Technology. It trades about 0.13 of its potential returns per unit of risk. Invesco Technology Fund is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,826 in Invesco Technology Fund on September 2, 2024 and sell it today you would earn a total of 2,527 from holding Invesco Technology Fund or generate 52.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gotham Hedged E vs. Invesco Technology Fund
Performance |
| Timeline |
| Gotham Hedged E |
| Invesco Technology |
Gotham Hedged and Invesco Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gotham Hedged and Invesco Technology
The main advantage of trading using opposite Gotham Hedged and Invesco Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gotham Hedged position performs unexpectedly, Invesco Technology 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 Technology will offset losses from the drop in Invesco Technology's long position.| Gotham Hedged vs. Gotham Defensive Long | Gotham Hedged vs. Gotham Large Value | Gotham Hedged vs. Gotham Enhanced 500 | Gotham Hedged vs. Gotham Enhanced Return |
| Invesco Technology vs. Deutsche Real Estate | Invesco Technology vs. Simt Real Estate | Invesco Technology vs. Tiaa Cref Real Estate | Invesco Technology vs. Commonwealth Real Estate |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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