Correlation Between Invesco High and DBS Group
Can any of the company-specific risk be diversified away by investing in both Invesco High and DBS Group 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 DBS Group 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 DBS Group Holdings, you can compare the effects of market volatilities on Invesco High and DBS Group 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 DBS Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco High and DBS Group.
Diversification Opportunities for Invesco High and DBS Group
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and DBS is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Invesco High Income and DBS Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DBS Group Holdings 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 DBS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DBS Group Holdings has no effect on the direction of Invesco High i.e., Invesco High and DBS Group go up and down completely randomly.
Pair Corralation between Invesco High and DBS Group
Given the investment horizon of 90 days Invesco High is expected to generate 14.43 times less return on investment than DBS Group. But when comparing it to its historical volatility, Invesco High Income is 20.71 times less risky than DBS Group. It trades about 0.31 of its potential returns per unit of risk. DBS Group Holdings is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 11,524 in DBS Group Holdings on September 1, 2024 and sell it today you would earn a total of 1,105 from holding DBS Group Holdings or generate 9.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco High Income vs. DBS Group Holdings
Performance |
| Timeline |
| Invesco High Income |
| DBS Group Holdings |
Invesco High and DBS Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco High and DBS Group
The main advantage of trading using opposite Invesco High and DBS Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco High position performs unexpectedly, DBS Group 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 DBS Group will offset losses from the drop in DBS Group'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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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