Correlation Between Invesco Technology and Icon Information
Can any of the company-specific risk be diversified away by investing in both Invesco Technology and Icon Information 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 Icon Information 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 Icon Information Technology, you can compare the effects of market volatilities on Invesco Technology and Icon Information 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 Icon Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Technology and Icon Information.
Diversification Opportunities for Invesco Technology and Icon Information
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and Icon is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Technology Fund and Icon Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Information Tec 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 Icon Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Information Tec has no effect on the direction of Invesco Technology i.e., Invesco Technology and Icon Information go up and down completely randomly.
Pair Corralation between Invesco Technology and Icon Information
Assuming the 90 days horizon Invesco Technology Fund is expected to generate 1.31 times more return on investment than Icon Information. However, Invesco Technology is 1.31 times more volatile than Icon Information Technology. It trades about 0.19 of its potential returns per unit of risk. Icon Information Technology is currently generating about 0.1 per unit of risk. If you would invest 6,787 in Invesco Technology Fund on August 25, 2024 and sell it today you would earn a total of 426.00 from holding Invesco Technology Fund or generate 6.28% 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. Icon Information Technology
Performance |
| Timeline |
| Invesco Technology |
| Icon Information Tec |
Invesco Technology and Icon Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Technology and Icon Information
The main advantage of trading using opposite Invesco Technology and Icon Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Technology position performs unexpectedly, Icon Information 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 Icon Information will offset losses from the drop in Icon Information'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 |
| Icon Information vs. Vanguard Information Technology | Icon Information vs. Technology Portfolio Technology | Icon Information vs. Fidelity Select Semiconductors | Icon Information vs. Software And It |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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