Correlation Between Invesco EURO and Invesco Health
Can any of the company-specific risk be diversified away by investing in both Invesco EURO and Invesco Health 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 Health 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 Health Care, you can compare the effects of market volatilities on Invesco EURO and Invesco Health 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 Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco EURO and Invesco Health.
Diversification Opportunities for Invesco EURO and Invesco Health
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Invesco and Invesco is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Invesco EURO STOXX and Invesco Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Health Care 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 Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Health Care has no effect on the direction of Invesco EURO i.e., Invesco EURO and Invesco Health go up and down completely randomly.
Pair Corralation between Invesco EURO and Invesco Health
Assuming the 90 days trading horizon Invesco EURO STOXX is expected to under-perform the Invesco Health. In addition to that, Invesco EURO is 2.0 times more volatile than Invesco Health Care. It trades about -0.03 of its total potential returns per unit of risk. Invesco Health Care is currently generating about 0.02 per unit of volatility. If you would invest 68,685 in Invesco Health Care on August 25, 2024 and sell it today you would earn a total of 1,120 from holding Invesco Health Care or generate 1.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco EURO STOXX vs. Invesco Health Care
Performance |
| Timeline |
| Invesco EURO STOXX |
| Invesco Health Care |
Invesco EURO and Invesco Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco EURO and Invesco Health
The main advantage of trading using opposite Invesco EURO and Invesco Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco EURO position performs unexpectedly, Invesco Health 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 Health will offset losses from the drop in Invesco Health's long position.| Invesco EURO vs. Invesco MSCI Emerging | Invesco EURO vs. Invesco Markets Plc | Invesco EURO vs. Invesco FTSE RAFI | Invesco EURO vs. Invesco FTSE Emerging |
| Invesco Health vs. Invesco MSCI Emerging | Invesco Health vs. Invesco EURO STOXX | Invesco Health vs. Invesco Markets Plc | Invesco Health 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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