Correlation Between American Funds and Invesco Energy
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Invesco Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Emerging and Invesco Energy Fund, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Invesco Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Invesco Energy.
Diversification Opportunities for American Funds and Invesco Energy
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Invesco is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Emerging and Invesco Energy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Energy and American Funds 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 American Funds Emerging 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 American Funds i.e., American Funds and Invesco Energy go up and down completely randomly.
Pair Corralation between American Funds and Invesco Energy
Assuming the 90 days horizon American Funds Emerging is expected to under-perform the Invesco Energy. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Funds Emerging is 2.44 times less risky than Invesco Energy. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Invesco Energy Fund is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 2,507 in Invesco Energy Fund on September 4, 2024 and sell it today you would earn a total of 131.00 from holding Invesco Energy Fund or generate 5.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
American Funds Emerging vs. Invesco Energy Fund
Performance |
| Timeline |
| American Funds Emerging |
| Invesco Energy |
American Funds and Invesco Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Invesco Energy
The main advantage of trading using opposite American Funds and Invesco Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Income Fund Of | American Funds vs. American Funds 2015 | American Funds vs. New World Fund | American Funds vs. American Mutual Fund |
| Invesco Energy vs. Invesco Municipal Income | Invesco Energy vs. Invesco Municipal Income | Invesco Energy vs. Invesco Municipal Income | Invesco Energy vs. Oppenheimer Rising Dividends |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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