Correlation Between Invesco Energy and Jennison Natural
Can any of the company-specific risk be diversified away by investing in both Invesco Energy and Jennison Natural 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 Jennison Natural 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 Jennison Natural Resources, you can compare the effects of market volatilities on Invesco Energy and Jennison Natural 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 Jennison Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Energy and Jennison Natural.
Diversification Opportunities for Invesco Energy and Jennison Natural
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and Jennison is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Energy Fund and Jennison Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jennison Natural Res 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 Jennison Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jennison Natural Res has no effect on the direction of Invesco Energy i.e., Invesco Energy and Jennison Natural go up and down completely randomly.
Pair Corralation between Invesco Energy and Jennison Natural
Assuming the 90 days horizon Invesco Energy Fund is expected to generate 1.01 times more return on investment than Jennison Natural. However, Invesco Energy is 1.01 times more volatile than Jennison Natural Resources. It trades about 0.12 of its potential returns per unit of risk. Jennison Natural Resources is currently generating about 0.06 per unit of risk. If you would invest 2,368 in Invesco Energy Fund on September 12, 2024 and sell it today you would earn a total of 185.00 from holding Invesco Energy Fund or generate 7.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Energy Fund vs. Jennison Natural Resources
Performance |
| Timeline |
| Invesco Energy |
| Jennison Natural Res |
Invesco Energy and Jennison Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Energy and Jennison Natural
The main advantage of trading using opposite Invesco Energy and Jennison Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Energy position performs unexpectedly, Jennison Natural 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 Jennison Natural will offset losses from the drop in Jennison Natural's long position.| Invesco Energy vs. Vanguard Energy Fund | Invesco Energy vs. Vanguard Energy Index | Invesco Energy vs. Fidelity Select Portfolios | Invesco Energy vs. Fidelity Advisor Energy |
| Jennison Natural vs. Vanguard Materials Index | Jennison Natural vs. T Rowe Price | Jennison Natural vs. Gmo Trust | Jennison Natural vs. Gmo 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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |