Correlation Between Invesco Dynamic and IShares Oil
Can any of the company-specific risk be diversified away by investing in both Invesco Dynamic and IShares Oil 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 Dynamic and IShares Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Dynamic Oil and iShares Oil Gas, you can compare the effects of market volatilities on Invesco Dynamic and IShares Oil 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 Dynamic with a short position of IShares Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Dynamic and IShares Oil.
Diversification Opportunities for Invesco Dynamic and IShares Oil
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Invesco and IShares is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Dynamic Oil and iShares Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Oil Gas and Invesco Dynamic 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 Dynamic Oil are associated (or correlated) with IShares Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Oil Gas has no effect on the direction of Invesco Dynamic i.e., Invesco Dynamic and IShares Oil go up and down completely randomly.
Pair Corralation between Invesco Dynamic and IShares Oil
Considering the 90-day investment horizon Invesco Dynamic Oil is expected to under-perform the IShares Oil. But the etf apears to be less risky and, when comparing its historical volatility, Invesco Dynamic Oil is 1.11 times less risky than IShares Oil. The etf trades about -0.21 of its potential returns per unit of risk. The iShares Oil Gas is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 9,437 in iShares Oil Gas on November 29, 2024 and sell it today you would lose (251.00) from holding iShares Oil Gas or give up 2.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Dynamic Oil vs. iShares Oil Gas
Performance |
| Timeline |
| Invesco Dynamic Oil |
| iShares Oil Gas |
Invesco Dynamic and IShares Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Dynamic and IShares Oil
The main advantage of trading using opposite Invesco Dynamic and IShares Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Dynamic position performs unexpectedly, IShares Oil 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 Oil will offset losses from the drop in IShares Oil's long position.| Invesco Dynamic vs. Invesco Dynamic Energy | Invesco Dynamic vs. iShares Oil Equipment | Invesco Dynamic vs. SPDR SP Oil | Invesco Dynamic vs. Invesco DWA Energy |
| IShares Oil vs. iShares Oil Equipment | IShares Oil vs. iShares Energy ETF | IShares Oil vs. Invesco Dynamic Energy | IShares Oil vs. SPDR SP Oil |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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