Correlation Between Energy Services and Invesco Energy
Can any of the company-specific risk be diversified away by investing in both Energy Services 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 Energy Services and Invesco Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Services Fund and Invesco Energy Fund, you can compare the effects of market volatilities on Energy Services 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 Energy Services with a short position of Invesco Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Services and Invesco Energy.
Diversification Opportunities for Energy Services and Invesco Energy
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Energy and Invesco is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Energy Services 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 Energy Services 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 Energy Services 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 Energy Services i.e., Energy Services and Invesco Energy go up and down completely randomly.
Pair Corralation between Energy Services and Invesco Energy
Assuming the 90 days horizon Energy Services Fund is expected to under-perform the Invesco Energy. In addition to that, Energy Services is 1.44 times more volatile than Invesco Energy Fund. It trades about 0.0 of its total potential returns per unit of risk. Invesco Energy Fund is currently generating about 0.07 per unit of volatility. If you would invest 2,391 in Invesco Energy Fund on November 4, 2024 and sell it today you would earn a total of 28.00 from holding Invesco Energy Fund or generate 1.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
Energy Services Fund vs. Invesco Energy Fund
Performance |
| Timeline |
| Energy Services |
| Invesco Energy |
Energy Services and Invesco Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Services and Invesco Energy
The main advantage of trading using opposite Energy Services and Invesco Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Services 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.| Energy Services vs. Energy Fund Investor | Energy Services vs. Basic Materials Fund | Energy Services vs. Electronics Fund Investor | Energy Services vs. Health Care Fund |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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