Correlation Between Invesco High and First Trust
Can any of the company-specific risk be diversified away by investing in both Invesco High 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 High 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 High Yield and First Trust Small, you can compare the effects of market volatilities on Invesco High 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 High with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco High and First Trust.
Diversification Opportunities for Invesco High and First Trust
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Invesco and First is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Invesco High Yield and First Trust Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Small and Invesco High 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 High Yield 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 Small has no effect on the direction of Invesco High i.e., Invesco High and First Trust go up and down completely randomly.
Pair Corralation between Invesco High and First Trust
Considering the 90-day investment horizon Invesco High is expected to generate 1.25 times less return on investment than First Trust. But when comparing it to its historical volatility, Invesco High Yield is 1.33 times less risky than First Trust. It trades about 0.04 of its potential returns per unit of risk. First Trust Small is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 5,011 in First Trust Small on August 27, 2024 and sell it today you would earn a total of 944.00 from holding First Trust Small or generate 18.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco High Yield vs. First Trust Small
Performance |
| Timeline |
| Invesco High Yield |
| First Trust Small |
Invesco High and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco High and First Trust
The main advantage of trading using opposite Invesco High and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco High 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 High vs. Invesco Dividend Achievers | Invesco High vs. Invesco International Dividend | Invesco High vs. First Trust Morningstar | Invesco High vs. WisdomTree High Dividend |
| First Trust vs. First Trust Mid | First Trust vs. First Trust Small | First Trust vs. First Trust Mid | First Trust vs. First Trust Small |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |