Correlation Between Small Company and Invesco Select
Can any of the company-specific risk be diversified away by investing in both Small Company 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 Small Company and Invesco Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Pany Growth and Invesco Select Risk, you can compare the effects of market volatilities on Small Company 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 Small Company with a short position of Invesco Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Company and Invesco Select.
Diversification Opportunities for Small Company and Invesco Select
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Small and Invesco is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Small Pany Growth 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 Small Company 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 Small Pany Growth 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 Small Company i.e., Small Company and Invesco Select go up and down completely randomly.
Pair Corralation between Small Company and Invesco Select
Assuming the 90 days horizon Small Pany Growth is expected to generate 4.14 times more return on investment than Invesco Select. However, Small Company is 4.14 times more volatile than Invesco Select Risk. It trades about 0.66 of its potential returns per unit of risk. Invesco Select Risk is currently generating about 0.36 per unit of risk. If you would invest 1,285 in Small Pany Growth on September 3, 2024 and sell it today you would earn a total of 384.00 from holding Small Pany Growth or generate 29.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Pany Growth vs. Invesco Select Risk
Performance |
| Timeline |
| Small Pany Growth |
| Invesco Select Risk |
Small Company and Invesco Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Company and Invesco Select
The main advantage of trading using opposite Small Company and Invesco Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Company 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.| Small Company vs. Mid Cap Growth | Small Company vs. Growth Portfolio Class | Small Company vs. Morgan Stanley Multi | Small Company vs. Emerging Markets Portfolio |
| Invesco Select vs. The Hartford Small | Invesco Select vs. Tax Managed Mid Small | Invesco Select vs. Small Pany Growth | Invesco Select vs. Touchstone Small Cap |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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