Correlation Between Multisector Bond and Invesco Select
Can any of the company-specific risk be diversified away by investing in both Multisector Bond and Invesco Select 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 Multisector Bond and Invesco Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multisector Bond Sma and Invesco Select Risk, you can compare the effects of market volatilities on Multisector Bond and Invesco Select 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 Multisector Bond with a short position of Invesco Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multisector Bond and Invesco Select.
Diversification Opportunities for Multisector Bond and Invesco Select
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Multisector and Invesco is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Multisector Bond Sma and Invesco Select Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Select Risk and Multisector Bond 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 Multisector Bond Sma are associated (or correlated) with Invesco Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Select Risk has no effect on the direction of Multisector Bond i.e., Multisector Bond and Invesco Select go up and down completely randomly.
Pair Corralation between Multisector Bond and Invesco Select
Assuming the 90 days horizon Multisector Bond is expected to generate 1.17 times less return on investment than Invesco Select. But when comparing it to its historical volatility, Multisector Bond Sma is 2.58 times less risky than Invesco Select. It trades about 0.18 of its potential returns per unit of risk. Invesco Select Risk is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,432 in Invesco Select Risk on August 30, 2024 and sell it today you would earn a total of 111.00 from holding Invesco Select Risk or generate 7.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multisector Bond Sma vs. Invesco Select Risk
Performance |
| Timeline |
| Multisector Bond Sma |
| Invesco Select Risk |
Multisector Bond and Invesco Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multisector Bond and Invesco Select
The main advantage of trading using opposite Multisector Bond and Invesco Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multisector Bond position performs unexpectedly, Invesco Select 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 Select will offset losses from the drop in Invesco Select's long position.| Multisector Bond vs. Columbia Porate Income | Multisector Bond vs. Columbia Ultra Short | Multisector Bond vs. Columbia Treasury Index | Multisector Bond vs. Columbia Small Cap |
| Invesco Select vs. Barings Active Short | Invesco Select vs. T Rowe Price | Invesco Select vs. Multisector Bond Sma | Invesco Select vs. Mirova Global Green |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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