Correlation Between Simt Global and Invesco Technology
Can any of the company-specific risk be diversified away by investing in both Simt Global and Invesco Technology 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 Simt Global and Invesco Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simt Global Managed and Invesco Technology Fund, you can compare the effects of market volatilities on Simt Global and Invesco Technology 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 Simt Global with a short position of Invesco Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt Global and Invesco Technology.
Diversification Opportunities for Simt Global and Invesco Technology
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Simt and Invesco is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Simt Global Managed and Invesco Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Technology and Simt Global 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 Simt Global Managed are associated (or correlated) with Invesco Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Technology has no effect on the direction of Simt Global i.e., Simt Global and Invesco Technology go up and down completely randomly.
Pair Corralation between Simt Global and Invesco Technology
Assuming the 90 days horizon Simt Global is expected to generate 3.26 times less return on investment than Invesco Technology. But when comparing it to its historical volatility, Simt Global Managed is 3.11 times less risky than Invesco Technology. It trades about 0.12 of its potential returns per unit of risk. Invesco Technology Fund is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 6,735 in Invesco Technology Fund on October 25, 2024 and sell it today you would earn a total of 209.00 from holding Invesco Technology Fund or generate 3.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simt Global Managed vs. Invesco Technology Fund
Performance |
| Timeline |
| Simt Global Managed |
| Invesco Technology |
Simt Global and Invesco Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simt Global and Invesco Technology
The main advantage of trading using opposite Simt Global and Invesco Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simt Global position performs unexpectedly, Invesco Technology 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 Technology will offset losses from the drop in Invesco Technology's long position.| Simt Global vs. Edward Jones Money | Simt Global vs. Principal Fds Money | Simt Global vs. Aig Government Money | Simt Global vs. Ab Government Exchange |
| Invesco Technology vs. L Abbett Growth | Invesco Technology vs. Upright Growth Income | Invesco Technology vs. T Rowe Price | Invesco Technology vs. Transamerica Capital Growth |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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