Correlation Between Invesco Small and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Invesco Small and Emerging 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 Small and Emerging Markets 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 Emerging Markets Small, you can compare the effects of market volatilities on Invesco Small and Emerging 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 Small with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Small and Emerging Markets.
Diversification Opportunities for Invesco Small and Emerging Markets
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Invesco and Emerging is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Small Cap and Emerging Markets Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Small 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 Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Small has no effect on the direction of Invesco Small i.e., Invesco Small and Emerging Markets go up and down completely randomly.
Pair Corralation between Invesco Small and Emerging Markets
Assuming the 90 days horizon Invesco Small Cap is expected to generate 1.64 times more return on investment than Emerging Markets. However, Invesco Small is 1.64 times more volatile than Emerging Markets Small. It trades about 0.12 of its potential returns per unit of risk. Emerging Markets Small is currently generating about 0.01 per unit of risk. If you would invest 1,517 in Invesco Small Cap on September 3, 2024 and sell it today you would earn a total of 324.00 from holding Invesco Small Cap or generate 21.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Small Cap vs. Emerging Markets Small
Performance |
| Timeline |
| Invesco Small Cap |
| Emerging Markets Small |
Invesco Small and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Small and Emerging Markets
The main advantage of trading using opposite Invesco Small and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Small position performs unexpectedly, Emerging 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Invesco Small vs. Dunham Porategovernment Bond | Invesco Small vs. Fidelity Series Government | Invesco Small vs. Blackrock Government Bond | Invesco Small vs. Government Securities Fund |
| Emerging Markets vs. Nationwide Growth Fund | Emerging Markets vs. Qs Growth Fund | Emerging Markets vs. Rational Defensive Growth | Emerging Markets vs. Chase Growth Fund |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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