Correlation Between Invesco High and Somerset Trust
Can any of the company-specific risk be diversified away by investing in both Invesco High and Somerset Trust 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 Somerset Trust 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 Somerset Trust Holding, you can compare the effects of market volatilities on Invesco High and Somerset Trust 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 Somerset Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco High and Somerset Trust.
Diversification Opportunities for Invesco High and Somerset Trust
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and Somerset is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Invesco High Income and Somerset Trust Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Somerset Trust Holding 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 Somerset Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Somerset Trust Holding has no effect on the direction of Invesco High i.e., Invesco High and Somerset Trust go up and down completely randomly.
Pair Corralation between Invesco High and Somerset Trust
Given the investment horizon of 90 days Invesco High is expected to generate 12.61 times less return on investment than Somerset Trust. But when comparing it to its historical volatility, Invesco High Income is 21.09 times less risky than Somerset Trust. It trades about 0.27 of its potential returns per unit of risk. Somerset Trust Holding is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 4,150 in Somerset Trust Holding on August 29, 2024 and sell it today you would earn a total of 339.00 from holding Somerset Trust Holding or generate 8.17% 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. Somerset Trust Holding
Performance |
| Timeline |
| Invesco High Income |
| Somerset Trust Holding |
Invesco High and Somerset Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco High and Somerset Trust
The main advantage of trading using opposite Invesco High and Somerset Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco High position performs unexpectedly, Somerset Trust 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 Somerset Trust will offset losses from the drop in Somerset Trust'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 |
| Somerset Trust vs. Potomac Bancshares | Somerset Trust vs. Apollo Bancorp | Somerset Trust vs. The Farmers Bank | Somerset Trust vs. 1ST SUMMIT BANCORP |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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