Correlation Between Invesco KBW and Invesco Active
Can any of the company-specific risk be diversified away by investing in both Invesco KBW and Invesco Active 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 Invesco Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco KBW Premium and Invesco Active Real, you can compare the effects of market volatilities on Invesco KBW and Invesco Active 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 Invesco Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco KBW and Invesco Active.
Diversification Opportunities for Invesco KBW and Invesco Active
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and Invesco is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Invesco KBW Premium and Invesco Active Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Active Real 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 Premium are associated (or correlated) with Invesco Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Active Real has no effect on the direction of Invesco KBW i.e., Invesco KBW and Invesco Active go up and down completely randomly.
Pair Corralation between Invesco KBW and Invesco Active
Given the investment horizon of 90 days Invesco KBW Premium is expected to under-perform the Invesco Active. In addition to that, Invesco KBW is 1.01 times more volatile than Invesco Active Real. It trades about -0.02 of its total potential returns per unit of risk. Invesco Active Real is currently generating about 0.16 per unit of volatility. If you would invest 9,638 in Invesco Active Real on August 30, 2024 and sell it today you would earn a total of 317.00 from holding Invesco Active Real or generate 3.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco KBW Premium vs. Invesco Active Real
Performance |
| Timeline |
| Invesco KBW Premium |
| Invesco Active Real |
Invesco KBW and Invesco Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco KBW and Invesco Active
The main advantage of trading using opposite Invesco KBW and Invesco Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco KBW position performs unexpectedly, Invesco Active 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 Invesco Active will offset losses from the drop in Invesco Active's long position.| Invesco KBW vs. iShares Core REIT | Invesco KBW vs. JPMorgan BetaBuilders International | Invesco KBW vs. Invesco Active Real |
| Invesco Active vs. First Trust SP | Invesco Active vs. iShares Residential and | Invesco Active vs. IQ Real Estate | Invesco Active vs. Nuveen Short Term REIT |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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