Correlation Between Invesco Technology and Sit Global
Can any of the company-specific risk be diversified away by investing in both Invesco Technology and Sit Global 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 Technology and Sit Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Technology Fund and Sit Global Dividend, you can compare the effects of market volatilities on Invesco Technology and Sit Global 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 Technology with a short position of Sit Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Technology and Sit Global.
Diversification Opportunities for Invesco Technology and Sit Global
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and Sit is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Technology Fund and Sit Global Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Global Dividend and Invesco Technology 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 Technology Fund are associated (or correlated) with Sit Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Global Dividend has no effect on the direction of Invesco Technology i.e., Invesco Technology and Sit Global go up and down completely randomly.
Pair Corralation between Invesco Technology and Sit Global
Assuming the 90 days horizon Invesco Technology Fund is expected to generate 2.07 times more return on investment than Sit Global. However, Invesco Technology is 2.07 times more volatile than Sit Global Dividend. It trades about 0.1 of its potential returns per unit of risk. Sit Global Dividend is currently generating about 0.11 per unit of risk. If you would invest 6,054 in Invesco Technology Fund on September 3, 2024 and sell it today you would earn a total of 1,299 from holding Invesco Technology Fund or generate 21.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Technology Fund vs. Sit Global Dividend
Performance |
| Timeline |
| Invesco Technology |
| Sit Global Dividend |
Invesco Technology and Sit Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Technology and Sit Global
The main advantage of trading using opposite Invesco Technology and Sit Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Technology position performs unexpectedly, Sit Global 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 Sit Global will offset losses from the drop in Sit Global's long position.| Invesco Technology vs. Vanguard Information Technology | Invesco Technology vs. Technology Portfolio Technology | Invesco Technology vs. Fidelity Select Semiconductors | Invesco Technology vs. Software And It |
| Sit Global vs. Invesco Technology Fund | Sit Global vs. Ivy Science And | Sit Global vs. Science Technology Fund | Sit Global vs. Mfs Technology Fund |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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