Correlation Between Invesco Gold and New Perspective
Can any of the company-specific risk be diversified away by investing in both Invesco Gold and New Perspective 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 Gold and New Perspective into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Gold Special and New Perspective Fund, you can compare the effects of market volatilities on Invesco Gold and New Perspective 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 Gold with a short position of New Perspective. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Gold and New Perspective.
Diversification Opportunities for Invesco Gold and New Perspective
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and New is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Gold Special and New Perspective Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Perspective and Invesco Gold 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 Gold Special are associated (or correlated) with New Perspective. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Perspective has no effect on the direction of Invesco Gold i.e., Invesco Gold and New Perspective go up and down completely randomly.
Pair Corralation between Invesco Gold and New Perspective
Assuming the 90 days horizon Invesco Gold Special is expected to generate 2.38 times more return on investment than New Perspective. However, Invesco Gold is 2.38 times more volatile than New Perspective Fund. It trades about 0.03 of its potential returns per unit of risk. New Perspective Fund is currently generating about 0.04 per unit of risk. If you would invest 2,755 in Invesco Gold Special on August 30, 2024 and sell it today you would earn a total of 79.00 from holding Invesco Gold Special or generate 2.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Gold Special vs. New Perspective Fund
Performance |
| Timeline |
| Invesco Gold Special |
| New Perspective |
Invesco Gold and New Perspective Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Gold and New Perspective
The main advantage of trading using opposite Invesco Gold and New Perspective positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Gold position performs unexpectedly, New Perspective 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 New Perspective will offset losses from the drop in New Perspective's long position.| Invesco Gold vs. Calvert Moderate Allocation | Invesco Gold vs. Multimanager Lifestyle Moderate | Invesco Gold vs. Dimensional Retirement Income | Invesco Gold vs. Saat Moderate Strategy |
| New Perspective vs. Technology Ultrasector Profund | New Perspective vs. Technology Ultrasector Profund | New Perspective vs. Hennessy Technology Fund | New Perspective vs. Global Technology Portfolio |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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