Correlation Between Invesco Select and Invesco Discovery
Can any of the company-specific risk be diversified away by investing in both Invesco Select and Invesco Discovery 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 Select and Invesco Discovery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Select Risk and Invesco Discovery, you can compare the effects of market volatilities on Invesco Select and Invesco Discovery 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 Select with a short position of Invesco Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Select and Invesco Discovery.
Diversification Opportunities for Invesco Select and Invesco Discovery
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Invesco and Invesco is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Select Risk and Invesco Discovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Discovery and Invesco Select 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 Select Risk are associated (or correlated) with Invesco Discovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Discovery has no effect on the direction of Invesco Select i.e., Invesco Select and Invesco Discovery go up and down completely randomly.
Pair Corralation between Invesco Select and Invesco Discovery
Assuming the 90 days horizon Invesco Select is expected to generate 5.68 times less return on investment than Invesco Discovery. But when comparing it to its historical volatility, Invesco Select Risk is 3.28 times less risky than Invesco Discovery. It trades about 0.14 of its potential returns per unit of risk. Invesco Discovery is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 10,312 in Invesco Discovery on August 24, 2024 and sell it today you would earn a total of 934.00 from holding Invesco Discovery or generate 9.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Select Risk vs. Invesco Discovery
Performance |
| Timeline |
| Invesco Select Risk |
| Invesco Discovery |
Invesco Select and Invesco Discovery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Select and Invesco Discovery
The main advantage of trading using opposite Invesco Select and Invesco Discovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Select position performs unexpectedly, Invesco Discovery 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 Discovery will offset losses from the drop in Invesco Discovery's long position.| Invesco Select vs. Materials Portfolio Fidelity | Invesco Select vs. Shelton Funds | Invesco Select vs. Omni Small Cap Value | Invesco Select vs. Eic Value Fund |
| Invesco Discovery vs. Short Oil Gas | Invesco Discovery vs. Gamco Natural Resources | Invesco Discovery vs. Energy Basic Materials | Invesco Discovery 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |