Correlation Between Invesco California and SWK Holdings
Can any of the company-specific risk be diversified away by investing in both Invesco California and SWK Holdings 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 California and SWK Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco California Value and SWK Holdings Corp, you can compare the effects of market volatilities on Invesco California and SWK Holdings 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 California with a short position of SWK Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco California and SWK Holdings.
Diversification Opportunities for Invesco California and SWK Holdings
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Invesco and SWK is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Invesco California Value and SWK Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWK Holdings Corp and Invesco California 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 California Value are associated (or correlated) with SWK Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWK Holdings Corp has no effect on the direction of Invesco California i.e., Invesco California and SWK Holdings go up and down completely randomly.
Pair Corralation between Invesco California and SWK Holdings
Considering the 90-day investment horizon Invesco California Value is expected to generate 0.62 times more return on investment than SWK Holdings. However, Invesco California Value is 1.62 times less risky than SWK Holdings. It trades about -0.01 of its potential returns per unit of risk. SWK Holdings Corp is currently generating about -0.12 per unit of risk. If you would invest 1,061 in Invesco California Value on August 29, 2024 and sell it today you would lose (7.00) from holding Invesco California Value or give up 0.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco California Value vs. SWK Holdings Corp
Performance |
| Timeline |
| Invesco California Value |
| SWK Holdings Corp |
Invesco California and SWK Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco California and SWK Holdings
The main advantage of trading using opposite Invesco California and SWK Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco California position performs unexpectedly, SWK Holdings 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 SWK Holdings will offset losses from the drop in SWK Holdings' long position.| Invesco California vs. Pimco California Municipal | Invesco California vs. Invesco Pennsylvania Value | Invesco California vs. Nuveen California Dividend | Invesco California vs. Invesco Advantage MIT |
| SWK Holdings vs. Invesco Trust For | SWK Holdings vs. Invesco California Value | SWK Holdings vs. GAMCO Natural Resources | SWK Holdings vs. Nuveen Pennsylvania Quality |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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