Correlation Between Hunter Small and Invesco Energy
Can any of the company-specific risk be diversified away by investing in both Hunter Small and Invesco Energy 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 Hunter Small and Invesco Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hunter Small Cap and Invesco Energy Fund, you can compare the effects of market volatilities on Hunter Small and Invesco Energy 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 Hunter Small with a short position of Invesco Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hunter Small and Invesco Energy.
Diversification Opportunities for Hunter Small and Invesco Energy
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hunter and Invesco is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Hunter Small Cap and Invesco Energy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Energy and Hunter Small 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 Hunter Small Cap are associated (or correlated) with Invesco Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Energy has no effect on the direction of Hunter Small i.e., Hunter Small and Invesco Energy go up and down completely randomly.
Pair Corralation between Hunter Small and Invesco Energy
Assuming the 90 days horizon Hunter Small Cap is expected to generate 0.91 times more return on investment than Invesco Energy. However, Hunter Small Cap is 1.1 times less risky than Invesco Energy. It trades about 0.17 of its potential returns per unit of risk. Invesco Energy Fund is currently generating about 0.11 per unit of risk. If you would invest 1,238 in Hunter Small Cap on November 3, 2024 and sell it today you would earn a total of 36.00 from holding Hunter Small Cap or generate 2.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hunter Small Cap vs. Invesco Energy Fund
Performance |
| Timeline |
| Hunter Small Cap |
| Invesco Energy |
Hunter Small and Invesco Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hunter Small and Invesco Energy
The main advantage of trading using opposite Hunter Small and Invesco Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hunter Small position performs unexpectedly, Invesco Energy 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 Energy will offset losses from the drop in Invesco Energy's long position.| Hunter Small vs. James Alpha Structured | Hunter Small vs. Calamos Antetokounmpo Sustainable | Hunter Small vs. Ultra Short Fixed Income | Hunter Small vs. Vanguard Wellington Fund |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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