Correlation Between GM and Invesco Trust
Can any of the company-specific risk be diversified away by investing in both GM and Invesco Trust 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 GM and Invesco Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Invesco Trust For, you can compare the effects of market volatilities on GM and Invesco Trust 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 GM with a short position of Invesco Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Invesco Trust.
Diversification Opportunities for GM and Invesco Trust
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Invesco is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Invesco Trust For in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Trust For and GM 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 General Motors are associated (or correlated) with Invesco Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Trust For has no effect on the direction of GM i.e., GM and Invesco Trust go up and down completely randomly.
Pair Corralation between GM and Invesco Trust
Allowing for the 90-day total investment horizon General Motors is expected to generate 3.01 times more return on investment than Invesco Trust. However, GM is 3.01 times more volatile than Invesco Trust For. It trades about 0.05 of its potential returns per unit of risk. Invesco Trust For is currently generating about 0.03 per unit of risk. If you would invest 4,057 in General Motors on August 27, 2024 and sell it today you would earn a total of 1,796 from holding General Motors or generate 44.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Invesco Trust For
Performance |
| Timeline |
| General Motors |
| Invesco Trust For |
GM and Invesco Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Invesco Trust
The main advantage of trading using opposite GM and Invesco Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Invesco Trust 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 Trust will offset losses from the drop in Invesco Trust's long position.The idea behind General Motors and Invesco Trust For pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Invesco Trust vs. Invesco Municipal Income | Invesco Trust vs. DWS Municipal Income | Invesco Trust vs. MFS Municipal Income | Invesco Trust vs. MFS High Income |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |