Correlation Between Invesco KBW and VanEck BDC
Can any of the company-specific risk be diversified away by investing in both Invesco KBW and VanEck BDC 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 KBW and VanEck BDC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco KBW High and VanEck BDC Income, you can compare the effects of market volatilities on Invesco KBW and VanEck BDC 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 KBW with a short position of VanEck BDC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco KBW and VanEck BDC.
Diversification Opportunities for Invesco KBW and VanEck BDC
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Invesco and VanEck is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Invesco KBW High and VanEck BDC Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck BDC Income and Invesco KBW 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 KBW High are associated (or correlated) with VanEck BDC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck BDC Income has no effect on the direction of Invesco KBW i.e., Invesco KBW and VanEck BDC go up and down completely randomly.
Pair Corralation between Invesco KBW and VanEck BDC
Given the investment horizon of 90 days Invesco KBW is expected to generate 1.43 times less return on investment than VanEck BDC. In addition to that, Invesco KBW is 1.4 times more volatile than VanEck BDC Income. It trades about 0.04 of its total potential returns per unit of risk. VanEck BDC Income is currently generating about 0.09 per unit of volatility. If you would invest 1,193 in VanEck BDC Income on August 31, 2024 and sell it today you would earn a total of 501.00 from holding VanEck BDC Income or generate 41.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco KBW High vs. VanEck BDC Income
Performance |
| Timeline |
| Invesco KBW High |
| VanEck BDC Income |
Invesco KBW and VanEck BDC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco KBW and VanEck BDC
The main advantage of trading using opposite Invesco KBW and VanEck BDC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco KBW position performs unexpectedly, VanEck BDC 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 VanEck BDC will offset losses from the drop in VanEck BDC's long position.| Invesco KBW vs. Financial Select Sector | Invesco KBW vs. Vanguard Financials Index | Invesco KBW vs. SPDR SP Bank | Invesco KBW vs. iShares Financials ETF |
| VanEck BDC vs. Virtus InfraCap Preferred | VanEck BDC vs. VanEck Mortgage REIT | VanEck BDC vs. XAI Octagon Floating | VanEck BDC vs. Amplify High Income |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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