Correlation Between Invesco Small and Inverse Nasdaq-100
Can any of the company-specific risk be diversified away by investing in both Invesco Small and Inverse Nasdaq-100 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 Small and Inverse Nasdaq-100 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Small Cap and Inverse Nasdaq 100 Strategy, you can compare the effects of market volatilities on Invesco Small and Inverse Nasdaq-100 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 Small with a short position of Inverse Nasdaq-100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Small and Inverse Nasdaq-100.
Diversification Opportunities for Invesco Small and Inverse Nasdaq-100
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Invesco and Inverse is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Small Cap and Inverse Nasdaq 100 Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Nasdaq 100 and Invesco Small 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 Small Cap are associated (or correlated) with Inverse Nasdaq-100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Nasdaq 100 has no effect on the direction of Invesco Small i.e., Invesco Small and Inverse Nasdaq-100 go up and down completely randomly.
Pair Corralation between Invesco Small and Inverse Nasdaq-100
Assuming the 90 days horizon Invesco Small Cap is expected to generate 1.12 times more return on investment than Inverse Nasdaq-100. However, Invesco Small is 1.12 times more volatile than Inverse Nasdaq 100 Strategy. It trades about 0.05 of its potential returns per unit of risk. Inverse Nasdaq 100 Strategy is currently generating about -0.05 per unit of risk. If you would invest 1,337 in Invesco Small Cap on November 4, 2024 and sell it today you would earn a total of 192.00 from holding Invesco Small Cap or generate 14.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Small Cap vs. Inverse Nasdaq 100 Strategy
Performance |
| Timeline |
| Invesco Small Cap |
| Inverse Nasdaq 100 |
Invesco Small and Inverse Nasdaq-100 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Small and Inverse Nasdaq-100
The main advantage of trading using opposite Invesco Small and Inverse Nasdaq-100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Small position performs unexpectedly, Inverse Nasdaq-100 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 Inverse Nasdaq-100 will offset losses from the drop in Inverse Nasdaq-100's long position.| Invesco Small vs. Massmutual Premier High | Invesco Small vs. Catalyst Exceed Defined | Invesco Small vs. Ab High Income | Invesco Small vs. The Hartford High |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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