Correlation Between Global Resources and Invesco Energy
Can any of the company-specific risk be diversified away by investing in both Global Resources and Invesco Energy 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 Global Resources and Invesco Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Resources Fund and Invesco Energy Fund, you can compare the effects of market volatilities on Global Resources and Invesco Energy 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 Global Resources with a short position of Invesco Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Resources and Invesco Energy.
Diversification Opportunities for Global Resources and Invesco Energy
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GLOBAL and Invesco is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Global Resources Fund and Invesco Energy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Energy and Global Resources 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 Global Resources Fund are associated (or correlated) with Invesco Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Energy has no effect on the direction of Global Resources i.e., Global Resources and Invesco Energy go up and down completely randomly.
Pair Corralation between Global Resources and Invesco Energy
Assuming the 90 days horizon Global Resources is expected to generate 1.58 times less return on investment than Invesco Energy. But when comparing it to its historical volatility, Global Resources Fund is 1.07 times less risky than Invesco Energy. It trades about 0.03 of its potential returns per unit of risk. Invesco Energy Fund is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,773 in Invesco Energy Fund on August 29, 2024 and sell it today you would earn a total of 388.00 from holding Invesco Energy Fund or generate 13.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Resources Fund vs. Invesco Energy Fund
Performance |
| Timeline |
| Global Resources |
| Invesco Energy |
Global Resources and Invesco Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Resources and Invesco Energy
The main advantage of trading using opposite Global Resources and Invesco Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Resources position performs unexpectedly, Invesco Energy 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 Energy will offset losses from the drop in Invesco Energy's long position.The idea behind Global Resources Fund and Invesco Energy Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Invesco Energy vs. Guinness Atkinson Alternative | Invesco Energy vs. Firsthand Alternative Energy | Invesco Energy vs. Goldman Sachs Mlp | Invesco Energy vs. Dreyfus Natural Resources |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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