Correlation Between Invesco High and Federal Agricultural
Can any of the company-specific risk be diversified away by investing in both Invesco High and Federal Agricultural 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 High and Federal Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco High Income and Federal Agricultural Mortgage, you can compare the effects of market volatilities on Invesco High and Federal Agricultural 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 High with a short position of Federal Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco High and Federal Agricultural.
Diversification Opportunities for Invesco High and Federal Agricultural
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Invesco and Federal is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Invesco High Income and Federal Agricultural Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Agricultural and Invesco High 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 High Income are associated (or correlated) with Federal Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Agricultural has no effect on the direction of Invesco High i.e., Invesco High and Federal Agricultural go up and down completely randomly.
Pair Corralation between Invesco High and Federal Agricultural
Given the investment horizon of 90 days Invesco High is expected to generate 953.77 times less return on investment than Federal Agricultural. But when comparing it to its historical volatility, Invesco High Income is 432.4 times less risky than Federal Agricultural. It trades about 0.07 of its potential returns per unit of risk. Federal Agricultural Mortgage is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 13,697 in Federal Agricultural Mortgage on September 1, 2024 and sell it today you would earn a total of 2,804 from holding Federal Agricultural Mortgage or generate 20.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 79.37% |
| Values | Daily Returns |
Invesco High Income vs. Federal Agricultural Mortgage
Performance |
| Timeline |
| Invesco High Income |
| Federal Agricultural |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Invesco High and Federal Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco High and Federal Agricultural
The main advantage of trading using opposite Invesco High and Federal Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco High position performs unexpectedly, Federal Agricultural 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 Federal Agricultural will offset losses from the drop in Federal Agricultural's long position.| Invesco High vs. MFS Investment Grade | Invesco High vs. Eaton Vance National | Invesco High vs. Nuveen California Select | Invesco High vs. Federated Premier Municipal |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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