Correlation Between Invesco EURO and Invesco Markets
Can any of the company-specific risk be diversified away by investing in both Invesco EURO and Invesco Markets 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 EURO and Invesco Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco EURO STOXX and Invesco Markets II, you can compare the effects of market volatilities on Invesco EURO and Invesco Markets 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 EURO with a short position of Invesco Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco EURO and Invesco Markets.
Diversification Opportunities for Invesco EURO and Invesco Markets
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Invesco and Invesco is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Invesco EURO STOXX and Invesco Markets II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Markets II and Invesco EURO 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 EURO STOXX are associated (or correlated) with Invesco Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Markets II has no effect on the direction of Invesco EURO i.e., Invesco EURO and Invesco Markets go up and down completely randomly.
Pair Corralation between Invesco EURO and Invesco Markets
Assuming the 90 days trading horizon Invesco EURO STOXX is expected to generate 0.61 times more return on investment than Invesco Markets. However, Invesco EURO STOXX is 1.65 times less risky than Invesco Markets. It trades about -0.15 of its potential returns per unit of risk. Invesco Markets II is currently generating about -0.11 per unit of risk. If you would invest 880,700 in Invesco EURO STOXX on August 31, 2024 and sell it today you would lose (39,750) from holding Invesco EURO STOXX or give up 4.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Invesco EURO STOXX vs. Invesco Markets II
Performance |
| Timeline |
| Invesco EURO STOXX |
| Invesco Markets II |
Invesco EURO and Invesco Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco EURO and Invesco Markets
The main advantage of trading using opposite Invesco EURO and Invesco Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco EURO position performs unexpectedly, Invesco Markets 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 Markets will offset losses from the drop in Invesco Markets' long position.| Invesco EURO vs. GraniteShares 3x Short | Invesco EURO vs. WisdomTree Natural Gas | Invesco EURO vs. Leverage Shares 3x | Invesco EURO vs. WisdomTree Natural Gas |
| Invesco Markets vs. Invesco MSCI Emerging | Invesco Markets vs. Invesco EURO STOXX | Invesco Markets vs. Invesco Markets Plc | Invesco Markets vs. Invesco FTSE RAFI |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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