Correlation Between Invesco Energy and Arbitrage Fund
Can any of the company-specific risk be diversified away by investing in both Invesco Energy and Arbitrage Fund 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 Energy and Arbitrage Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Energy Fund and The Arbitrage Fund, you can compare the effects of market volatilities on Invesco Energy and Arbitrage Fund 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 Energy with a short position of Arbitrage Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Energy and Arbitrage Fund.
Diversification Opportunities for Invesco Energy and Arbitrage Fund
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Invesco and Arbitrage is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Energy Fund and The Arbitrage Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbitrage Fund and Invesco Energy 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 Energy Fund are associated (or correlated) with Arbitrage Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbitrage Fund has no effect on the direction of Invesco Energy i.e., Invesco Energy and Arbitrage Fund go up and down completely randomly.
Pair Corralation between Invesco Energy and Arbitrage Fund
Assuming the 90 days horizon Invesco Energy Fund is expected to under-perform the Arbitrage Fund. In addition to that, Invesco Energy is 4.27 times more volatile than The Arbitrage Fund. It trades about -0.18 of its total potential returns per unit of risk. The Arbitrage Fund is currently generating about 0.05 per unit of volatility. If you would invest 1,350 in The Arbitrage Fund on September 15, 2024 and sell it today you would earn a total of 3.00 from holding The Arbitrage Fund or generate 0.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Energy Fund vs. The Arbitrage Fund
Performance |
| Timeline |
| Invesco Energy |
| Arbitrage Fund |
Invesco Energy and Arbitrage Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Energy and Arbitrage Fund
The main advantage of trading using opposite Invesco Energy and Arbitrage Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Energy position performs unexpectedly, Arbitrage Fund 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 Arbitrage Fund will offset losses from the drop in Arbitrage Fund's long position.| Invesco Energy vs. Arrow Managed Futures | Invesco Energy vs. Falcon Focus Scv | Invesco Energy vs. Western Asset Municipal | Invesco Energy vs. Leggmason Partners Institutional |
| Arbitrage Fund vs. Invesco Energy Fund | Arbitrage Fund vs. Dreyfus Natural Resources | Arbitrage Fund vs. Jennison Natural Resources | Arbitrage Fund vs. Adams Natural Resources |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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