Correlation Between Invesco Technology and Long-term
Can any of the company-specific risk be diversified away by investing in both Invesco Technology and Long-term 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 Long-term 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 Long Term Government Fund, you can compare the effects of market volatilities on Invesco Technology and Long-term 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 Long-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Technology and Long-term.
Diversification Opportunities for Invesco Technology and Long-term
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and Long-term is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Technology Fund and Long Term Government Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long Term Government 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 Long-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long Term Government has no effect on the direction of Invesco Technology i.e., Invesco Technology and Long-term go up and down completely randomly.
Pair Corralation between Invesco Technology and Long-term
Assuming the 90 days horizon Invesco Technology Fund is expected to under-perform the Long-term. In addition to that, Invesco Technology is 1.87 times more volatile than Long Term Government Fund. It trades about -0.15 of its total potential returns per unit of risk. Long Term Government Fund is currently generating about 0.23 per unit of volatility. If you would invest 1,375 in Long Term Government Fund on November 28, 2024 and sell it today you would earn a total of 52.00 from holding Long Term Government Fund or generate 3.78% 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. Long Term Government Fund
Performance |
| Timeline |
| Invesco Technology |
| Long Term Government |
Invesco Technology and Long-term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Technology and Long-term
The main advantage of trading using opposite Invesco Technology and Long-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Technology position performs unexpectedly, Long-term 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 Long-term will offset losses from the drop in Long-term's long position.| Invesco Technology vs. Rmb Mendon Financial | Invesco Technology vs. Fidelity Advisor Financial | Invesco Technology vs. 1919 Financial Services | Invesco Technology vs. Financial Industries Fund |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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