Correlation Between Invesco CEF and First Trust
Can any of the company-specific risk be diversified away by investing in both Invesco CEF and First Trust 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 CEF and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco CEF Income and First Trust Multi Asset, you can compare the effects of market volatilities on Invesco CEF and First Trust 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 CEF with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco CEF and First Trust.
Diversification Opportunities for Invesco CEF and First Trust
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and First is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Invesco CEF Income and First Trust Multi Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Multi and Invesco CEF 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 CEF Income are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Multi has no effect on the direction of Invesco CEF i.e., Invesco CEF and First Trust go up and down completely randomly.
Pair Corralation between Invesco CEF and First Trust
Given the investment horizon of 90 days Invesco CEF is expected to generate 1.11 times less return on investment than First Trust. In addition to that, Invesco CEF is 1.22 times more volatile than First Trust Multi Asset. It trades about 0.35 of its total potential returns per unit of risk. First Trust Multi Asset is currently generating about 0.48 per unit of volatility. If you would invest 1,632 in First Trust Multi Asset on September 1, 2024 and sell it today you would earn a total of 62.00 from holding First Trust Multi Asset or generate 3.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco CEF Income vs. First Trust Multi Asset
Performance |
| Timeline |
| Invesco CEF Income |
| First Trust Multi |
Invesco CEF and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco CEF and First Trust
The main advantage of trading using opposite Invesco CEF and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco CEF position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Invesco CEF vs. SPDR SSgA Global | Invesco CEF vs. SPDR SSgA Income | Invesco CEF vs. VanEck Inflation Allocation | Invesco CEF vs. SPDR MSCI EAFE |
| First Trust vs. Global X SuperIncome | First Trust vs. iShares Morningstar Multi Asset | First Trust vs. Invesco CEF Income | First Trust vs. VanEck Fallen Angel |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |