Correlation Between New Perspective and Invesco Energy
Can any of the company-specific risk be diversified away by investing in both New Perspective 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 New Perspective and Invesco Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Perspective Fund and Invesco Energy Fund, you can compare the effects of market volatilities on New Perspective 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 New Perspective with a short position of Invesco Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Perspective and Invesco Energy.
Diversification Opportunities for New Perspective and Invesco Energy
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and Invesco is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding New Perspective Fund and Invesco Energy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Energy and New Perspective 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 New Perspective Fund 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 New Perspective i.e., New Perspective and Invesco Energy go up and down completely randomly.
Pair Corralation between New Perspective and Invesco Energy
Assuming the 90 days horizon New Perspective Fund is expected to generate 0.69 times more return on investment than Invesco Energy. However, New Perspective Fund is 1.44 times less risky than Invesco Energy. It trades about 0.13 of its potential returns per unit of risk. Invesco Energy Fund is currently generating about -0.14 per unit of risk. If you would invest 6,548 in New Perspective Fund on September 12, 2024 and sell it today you would earn a total of 115.00 from holding New Perspective Fund or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
New Perspective Fund vs. Invesco Energy Fund
Performance |
| Timeline |
| New Perspective |
| Invesco Energy |
New Perspective and Invesco Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Perspective and Invesco Energy
The main advantage of trading using opposite New Perspective and Invesco Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Perspective 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.| New Perspective vs. Sprott Gold Equity | New Perspective vs. James Balanced Golden | New Perspective vs. Franklin Gold Precious | New Perspective vs. Fidelity Advisor Gold |
| Invesco Energy vs. Vanguard Energy Fund | Invesco Energy vs. Vanguard Energy Index | Invesco Energy vs. Fidelity Select Portfolios | Invesco Energy vs. Fidelity Advisor Energy |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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