Correlation Between Invesco Aerospace and BNY Mellon
Can any of the company-specific risk be diversified away by investing in both Invesco Aerospace and BNY Mellon 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 Aerospace and BNY Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Aerospace Defense and BNY Mellon High, you can compare the effects of market volatilities on Invesco Aerospace and BNY Mellon 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 Aerospace with a short position of BNY Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Aerospace and BNY Mellon.
Diversification Opportunities for Invesco Aerospace and BNY Mellon
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and BNY is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Aerospace Defense and BNY Mellon High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNY Mellon High and Invesco Aerospace 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 Aerospace Defense are associated (or correlated) with BNY Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNY Mellon High has no effect on the direction of Invesco Aerospace i.e., Invesco Aerospace and BNY Mellon go up and down completely randomly.
Pair Corralation between Invesco Aerospace and BNY Mellon
Considering the 90-day investment horizon Invesco Aerospace Defense is expected to generate 1.94 times more return on investment than BNY Mellon. However, Invesco Aerospace is 1.94 times more volatile than BNY Mellon High. It trades about 0.13 of its potential returns per unit of risk. BNY Mellon High is currently generating about 0.22 per unit of risk. If you would invest 11,656 in Invesco Aerospace Defense on August 27, 2024 and sell it today you would earn a total of 448.00 from holding Invesco Aerospace Defense or generate 3.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Aerospace Defense vs. BNY Mellon High
Performance |
| Timeline |
| Invesco Aerospace Defense |
| BNY Mellon High |
Invesco Aerospace and BNY Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Aerospace and BNY Mellon
The main advantage of trading using opposite Invesco Aerospace and BNY Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Aerospace position performs unexpectedly, BNY Mellon 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 BNY Mellon will offset losses from the drop in BNY Mellon's long position.| Invesco Aerospace vs. SPDR SP Aerospace | Invesco Aerospace vs. iShares Aerospace Defense | Invesco Aerospace vs. Invesco Dynamic Building | Invesco Aerospace vs. Invesco Dynamic Semiconductors |
| BNY Mellon vs. Credit Suisse Asset | BNY Mellon vs. Mfs Intermediate High | BNY Mellon vs. Eaton Vance Risk | BNY Mellon vs. Nuveen Floating Rate |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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