Correlation Between Invesco Select and Invesco Energy
Can any of the company-specific risk be diversified away by investing in both Invesco Select 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 Invesco Select and Invesco Energy 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 Energy Fund, you can compare the effects of market volatilities on Invesco Select 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 Invesco Select with a short position of Invesco Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Select and Invesco Energy.
Diversification Opportunities for Invesco Select and Invesco Energy
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and Invesco is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Select Risk and Invesco Energy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Energy 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 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 Invesco Select i.e., Invesco Select and Invesco Energy go up and down completely randomly.
Pair Corralation between Invesco Select and Invesco Energy
Assuming the 90 days horizon Invesco Select is expected to generate 1.39 times less return on investment than Invesco Energy. But when comparing it to its historical volatility, Invesco Select Risk is 2.0 times less risky than Invesco Energy. It trades about 0.09 of its potential returns per unit of risk. Invesco Energy Fund is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,839 in Invesco Energy Fund on September 1, 2024 and sell it today you would earn a total of 342.00 from holding Invesco Energy Fund or generate 12.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Select Risk vs. Invesco Energy Fund
Performance |
| Timeline |
| Invesco Select Risk |
| Invesco Energy |
Invesco Select and Invesco Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Select and Invesco Energy
The main advantage of trading using opposite Invesco Select and Invesco Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Select 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.| Invesco Select vs. Blrc Sgy Mnp | Invesco Select vs. Legg Mason Partners | Invesco Select vs. Transamerica Intermediate Muni | Invesco Select vs. Maryland Tax Free Bond |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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