Correlation Between First Trust and Invesco Actively
Can any of the company-specific risk be diversified away by investing in both First Trust and Invesco Actively 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 First Trust and Invesco Actively into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Bloomberg and Invesco Actively Managed, you can compare the effects of market volatilities on First Trust and Invesco Actively 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 First Trust with a short position of Invesco Actively. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Invesco Actively.
Diversification Opportunities for First Trust and Invesco Actively
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Invesco is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Bloomberg and Invesco Actively Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Actively Managed and First Trust 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 First Trust Bloomberg are associated (or correlated) with Invesco Actively. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Actively Managed has no effect on the direction of First Trust i.e., First Trust and Invesco Actively go up and down completely randomly.
Pair Corralation between First Trust and Invesco Actively
Given the investment horizon of 90 days First Trust Bloomberg is expected to under-perform the Invesco Actively. In addition to that, First Trust is 1.13 times more volatile than Invesco Actively Managed. It trades about -0.14 of its total potential returns per unit of risk. Invesco Actively Managed is currently generating about 0.11 per unit of volatility. If you would invest 4,887 in Invesco Actively Managed on December 15, 2024 and sell it today you would earn a total of 86.00 from holding Invesco Actively Managed or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Bloomberg vs. Invesco Actively Managed
Performance |
| Timeline |
| First Trust Bloomberg |
| Invesco Actively Managed |
First Trust and Invesco Actively Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Invesco Actively
The main advantage of trading using opposite First Trust and Invesco Actively positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Invesco Actively 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 Actively will offset losses from the drop in Invesco Actively's long position.| First Trust vs. Invesco Actively Managed | ||
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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