Correlation Between Large-cap Growth and Invesco Technology
Can any of the company-specific risk be diversified away by investing in both Large-cap Growth and Invesco Technology 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 Large-cap Growth and Invesco Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Large Cap Growth Profund and Invesco Technology Fund, you can compare the effects of market volatilities on Large-cap Growth and Invesco Technology 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 Large-cap Growth with a short position of Invesco Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Large-cap Growth and Invesco Technology.
Diversification Opportunities for Large-cap Growth and Invesco Technology
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between LARGE-CAP and Invesco is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap Growth Profund and Invesco Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Technology and Large-cap Growth 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 Large Cap Growth Profund are associated (or correlated) with Invesco Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Technology has no effect on the direction of Large-cap Growth i.e., Large-cap Growth and Invesco Technology go up and down completely randomly.
Pair Corralation between Large-cap Growth and Invesco Technology
Assuming the 90 days horizon Large Cap Growth Profund is expected to under-perform the Invesco Technology. But the mutual fund apears to be less risky and, when comparing its historical volatility, Large Cap Growth Profund is 1.28 times less risky than Invesco Technology. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Invesco Technology Fund is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 6,735 in Invesco Technology Fund on October 25, 2024 and sell it today you would earn a total of 209.00 from holding Invesco Technology Fund or generate 3.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Large Cap Growth Profund vs. Invesco Technology Fund
Performance |
| Timeline |
| Large Cap Growth |
| Invesco Technology |
Large-cap Growth and Invesco Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Large-cap Growth and Invesco Technology
The main advantage of trading using opposite Large-cap Growth and Invesco Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Large-cap Growth position performs unexpectedly, Invesco Technology 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 Technology will offset losses from the drop in Invesco Technology's long position.| Large-cap Growth vs. Semiconductor Ultrasector Profund | Large-cap Growth vs. Western Asset Adjustable | Large-cap Growth vs. Credit Suisse Floating | Large-cap Growth vs. Rational Dividend Capture |
| Invesco Technology vs. L Abbett Growth | Invesco Technology vs. Upright Growth Income | Invesco Technology vs. T Rowe Price | Invesco Technology vs. Transamerica Capital Growth |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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