Correlation Between Main Sector and Invesco Global
Can any of the company-specific risk be diversified away by investing in both Main Sector and Invesco Global 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 Main Sector and Invesco Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Main Sector Rotation and Invesco Global Listed, you can compare the effects of market volatilities on Main Sector and Invesco Global 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 Main Sector with a short position of Invesco Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Sector and Invesco Global.
Diversification Opportunities for Main Sector and Invesco Global
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Main and Invesco is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Main Sector Rotation and Invesco Global Listed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Global Listed and Main Sector 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 Main Sector Rotation are associated (or correlated) with Invesco Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Global Listed has no effect on the direction of Main Sector i.e., Main Sector and Invesco Global go up and down completely randomly.
Pair Corralation between Main Sector and Invesco Global
Given the investment horizon of 90 days Main Sector is expected to generate 1.36 times less return on investment than Invesco Global. But when comparing it to its historical volatility, Main Sector Rotation is 1.39 times less risky than Invesco Global. It trades about 0.09 of its potential returns per unit of risk. Invesco Global Listed is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,373 in Invesco Global Listed on August 30, 2024 and sell it today you would earn a total of 2,747 from holding Invesco Global Listed or generate 62.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Main Sector Rotation vs. Invesco Global Listed
Performance |
| Timeline |
| Main Sector Rotation |
| Invesco Global Listed |
Main Sector and Invesco Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Main Sector and Invesco Global
The main advantage of trading using opposite Main Sector and Invesco Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Sector position performs unexpectedly, Invesco Global 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 Global will offset losses from the drop in Invesco Global's long position.| Main Sector vs. Main Thematic Innovation | Main Sector vs. SPDR SSGA Sector | Main Sector vs. iShares MSCI USA | Main Sector vs. SPDR MSCI USA |
| Invesco Global vs. ProShares Global Listed | Invesco Global vs. Invesco Dynamic Building | Invesco Global vs. Invesco Dynamic Large |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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