Correlation Between Invesco Optimum and IShares Small
Can any of the company-specific risk be diversified away by investing in both Invesco Optimum and IShares Small 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 Optimum and IShares Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Optimum Yield and iShares Small Cap, you can compare the effects of market volatilities on Invesco Optimum and IShares Small 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 Optimum with a short position of IShares Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Optimum and IShares Small.
Diversification Opportunities for Invesco Optimum and IShares Small
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Invesco and IShares is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Optimum Yield and iShares Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Small Cap and Invesco Optimum 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 Optimum Yield are associated (or correlated) with IShares Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Small Cap has no effect on the direction of Invesco Optimum i.e., Invesco Optimum and IShares Small go up and down completely randomly.
Pair Corralation between Invesco Optimum and IShares Small
Given the investment horizon of 90 days Invesco Optimum Yield is expected to under-perform the IShares Small. But the etf apears to be less risky and, when comparing its historical volatility, Invesco Optimum Yield is 2.42 times less risky than IShares Small. The etf trades about -0.02 of its potential returns per unit of risk. The iShares Small Cap is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 3,248 in iShares Small Cap on August 29, 2024 and sell it today you would earn a total of 332.00 from holding iShares Small Cap or generate 10.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Optimum Yield vs. iShares Small Cap
Performance |
| Timeline |
| Invesco Optimum Yield |
| iShares Small Cap |
Invesco Optimum and IShares Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Optimum and IShares Small
The main advantage of trading using opposite Invesco Optimum and IShares Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Optimum position performs unexpectedly, IShares Small 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 IShares Small will offset losses from the drop in IShares Small's long position.| Invesco Optimum vs. iShares GSCI Commodity | Invesco Optimum vs. First Trust Global | Invesco Optimum vs. iShares SP GSCI | Invesco Optimum vs. Invesco DB Commodity |
| IShares Small vs. Horizon Kinetics Inflation | IShares Small vs. Virtus ETF Trust | IShares Small vs. Invesco SP SmallCap | IShares Small vs. iShares MSCI USA |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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