Correlation Between Invesco Developing and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Invesco Developing and Emerging Markets 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 Invesco Developing and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Developing Markets and Emerging Markets Fund, you can compare the effects of market volatilities on Invesco Developing and Emerging Markets 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 Invesco Developing with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Developing and Emerging Markets.
Diversification Opportunities for Invesco Developing and Emerging Markets
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and Emerging is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Developing Markets and Emerging Markets Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets and Invesco Developing 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 Invesco Developing Markets are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets has no effect on the direction of Invesco Developing i.e., Invesco Developing and Emerging Markets go up and down completely randomly.
Pair Corralation between Invesco Developing and Emerging Markets
Assuming the 90 days horizon Invesco Developing is expected to generate 1.66 times less return on investment than Emerging Markets. But when comparing it to its historical volatility, Invesco Developing Markets is 1.09 times less risky than Emerging Markets. It trades about 0.03 of its potential returns per unit of risk. Emerging Markets Fund is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,077 in Emerging Markets Fund on September 1, 2024 and sell it today you would earn a total of 99.00 from holding Emerging Markets Fund or generate 9.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Developing Markets vs. Emerging Markets Fund
Performance |
| Timeline |
| Invesco Developing |
| Emerging Markets |
Invesco Developing and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Developing and Emerging Markets
The main advantage of trading using opposite Invesco Developing and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Developing position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Invesco Developing vs. Invesco Municipal Income | Invesco Developing vs. Invesco Municipal Income | Invesco Developing vs. Invesco Municipal Income | Invesco Developing vs. Oppenheimer Rising Dividends |
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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