Correlation Between Invesco FTSE and Capital Group
Can any of the company-specific risk be diversified away by investing in both Invesco FTSE and Capital Group 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 FTSE and Capital Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco FTSE RAFI and Capital Group International, you can compare the effects of market volatilities on Invesco FTSE and Capital Group 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 FTSE with a short position of Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco FTSE and Capital Group.
Diversification Opportunities for Invesco FTSE and Capital Group
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and Capital is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Invesco FTSE RAFI and Capital Group International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Intern and Invesco FTSE 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 FTSE RAFI are associated (or correlated) with Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Intern has no effect on the direction of Invesco FTSE i.e., Invesco FTSE and Capital Group go up and down completely randomly.
Pair Corralation between Invesco FTSE and Capital Group
Considering the 90-day investment horizon Invesco FTSE RAFI is expected to generate 1.07 times more return on investment than Capital Group. However, Invesco FTSE is 1.07 times more volatile than Capital Group International. It trades about -0.03 of its potential returns per unit of risk. Capital Group International is currently generating about -0.07 per unit of risk. If you would invest 4,984 in Invesco FTSE RAFI on September 3, 2024 and sell it today you would lose (28.00) from holding Invesco FTSE RAFI or give up 0.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco FTSE RAFI vs. Capital Group International
Performance |
| Timeline |
| Invesco FTSE RAFI |
| Capital Group Intern |
Invesco FTSE and Capital Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco FTSE and Capital Group
The main advantage of trading using opposite Invesco FTSE and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco FTSE position performs unexpectedly, Capital Group 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 Capital Group will offset losses from the drop in Capital Group's long position.| Invesco FTSE vs. Invesco FTSE RAFI | Invesco FTSE vs. Invesco FTSE RAFI | Invesco FTSE vs. Invesco FTSE RAFI | Invesco FTSE vs. Invesco FTSE RAFI |
| Capital Group vs. BrandywineGLOBAL Dynamic | Capital Group vs. First Trust Growth | Capital Group vs. Invesco NASDAQ Future | Capital Group vs. Burney Factor Rotation |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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