Correlation Between Invesco Energy and Mfs Technology
Can any of the company-specific risk be diversified away by investing in both Invesco Energy and Mfs 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 Invesco Energy and Mfs Technology 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 Mfs Technology Fund, you can compare the effects of market volatilities on Invesco Energy and Mfs 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 Invesco Energy with a short position of Mfs Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Energy and Mfs Technology.
Diversification Opportunities for Invesco Energy and Mfs Technology
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Invesco and Mfs is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Energy Fund and Mfs Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Technology 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 Mfs Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Technology has no effect on the direction of Invesco Energy i.e., Invesco Energy and Mfs Technology go up and down completely randomly.
Pair Corralation between Invesco Energy and Mfs Technology
Assuming the 90 days horizon Invesco Energy Fund is expected to generate 0.3 times more return on investment than Mfs Technology. However, Invesco Energy Fund is 3.28 times less risky than Mfs Technology. It trades about -0.06 of its potential returns per unit of risk. Mfs Technology Fund is currently generating about -0.12 per unit of risk. If you would invest 2,527 in Invesco Energy Fund on October 30, 2024 and sell it today you would lose (61.00) from holding Invesco Energy Fund or give up 2.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Energy Fund vs. Mfs Technology Fund
Performance |
| Timeline |
| Invesco Energy |
| Mfs Technology |
Invesco Energy and Mfs Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Energy and Mfs Technology
The main advantage of trading using opposite Invesco Energy and Mfs Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Energy position performs unexpectedly, Mfs 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 Mfs Technology will offset losses from the drop in Mfs Technology's long position.| Invesco Energy vs. Transamerica High Yield | Invesco Energy vs. Siit High Yield | Invesco Energy vs. Msift High Yield | Invesco Energy vs. Ab High Income |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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