Correlation Between Invesco Energy and Stone Harbor
Can any of the company-specific risk be diversified away by investing in both Invesco Energy and Stone Harbor 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 Stone Harbor 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 Stone Harbor Emerging, you can compare the effects of market volatilities on Invesco Energy and Stone Harbor 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 Stone Harbor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Energy and Stone Harbor.
Diversification Opportunities for Invesco Energy and Stone Harbor
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Invesco and Stone is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Energy Fund and Stone Harbor Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Harbor Emerging 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 Stone Harbor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Harbor Emerging has no effect on the direction of Invesco Energy i.e., Invesco Energy and Stone Harbor go up and down completely randomly.
Pair Corralation between Invesco Energy and Stone Harbor
Assuming the 90 days horizon Invesco Energy Fund is expected to generate 1.59 times more return on investment than Stone Harbor. However, Invesco Energy is 1.59 times more volatile than Stone Harbor Emerging. It trades about 0.24 of its potential returns per unit of risk. Stone Harbor Emerging is currently generating about 0.07 per unit of risk. If you would invest 2,507 in Invesco Energy Fund on September 5, 2024 and sell it today you would earn a total of 114.00 from holding Invesco Energy Fund or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Invesco Energy Fund vs. Stone Harbor Emerging
Performance |
| Timeline |
| Invesco Energy |
| Stone Harbor Emerging |
Invesco Energy and Stone Harbor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Energy and Stone Harbor
The main advantage of trading using opposite Invesco Energy and Stone Harbor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Energy position performs unexpectedly, Stone Harbor 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 Stone Harbor will offset losses from the drop in Stone Harbor's long position.| Invesco Energy vs. Invesco Municipal Income | Invesco Energy vs. Invesco Municipal Income | Invesco Energy vs. Invesco Municipal Income | Invesco Energy vs. Oppenheimer Rising Dividends |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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