Correlation Between Invesco Energy and Sound Shore
Can any of the company-specific risk be diversified away by investing in both Invesco Energy and Sound Shore 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 Sound Shore 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 Sound Shore Fund, you can compare the effects of market volatilities on Invesco Energy and Sound Shore 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 Sound Shore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Energy and Sound Shore.
Diversification Opportunities for Invesco Energy and Sound Shore
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Invesco and Sound is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Energy Fund and Sound Shore Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sound Shore 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 Sound Shore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sound Shore Fund has no effect on the direction of Invesco Energy i.e., Invesco Energy and Sound Shore go up and down completely randomly.
Pair Corralation between Invesco Energy and Sound Shore
Assuming the 90 days horizon Invesco Energy Fund is expected to generate 0.73 times more return on investment than Sound Shore. However, Invesco Energy Fund is 1.37 times less risky than Sound Shore. It trades about 0.03 of its potential returns per unit of risk. Sound Shore Fund is currently generating about -0.02 per unit of risk. If you would invest 2,236 in Invesco Energy Fund on December 11, 2024 and sell it today you would earn a total of 138.00 from holding Invesco Energy Fund or generate 6.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Energy Fund vs. Sound Shore Fund
Performance |
| Timeline |
| Invesco Energy |
| Sound Shore Fund |
Invesco Energy and Sound Shore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Energy and Sound Shore
The main advantage of trading using opposite Invesco Energy and Sound Shore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Energy position performs unexpectedly, Sound Shore 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 Sound Shore will offset losses from the drop in Sound Shore's long position.| Invesco Energy vs. Us Government Securities | ||
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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