Correlation Between Invesco Advantage and Swiss Re

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Can any of the company-specific risk be diversified away by investing in both Invesco Advantage and Swiss Re 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 Advantage and Swiss Re into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Advantage MIT and Swiss Re, you can compare the effects of market volatilities on Invesco Advantage and Swiss Re 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 Advantage with a short position of Swiss Re. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Advantage and Swiss Re.

Diversification Opportunities for Invesco Advantage and Swiss Re

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between Invesco and Swiss is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Advantage MIT and Swiss Re in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swiss Re and Invesco Advantage 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 Advantage MIT are associated (or correlated) with Swiss Re. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swiss Re has no effect on the direction of Invesco Advantage i.e., Invesco Advantage and Swiss Re go up and down completely randomly.

Pair Corralation between Invesco Advantage and Swiss Re

Considering the 90-day investment horizon Invesco Advantage is expected to generate 11.58 times less return on investment than Swiss Re. But when comparing it to its historical volatility, Invesco Advantage MIT is 1.54 times less risky than Swiss Re. It trades about 0.05 of its potential returns per unit of risk. Swiss Re is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  3,480  in Swiss Re on September 12, 2024 and sell it today you would earn a total of  240.00  from holding Swiss Re or generate 6.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Invesco Advantage MIT  vs.  Swiss Re

 Performance 
       Timeline  
Invesco Advantage MIT 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Invesco Advantage MIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, Invesco Advantage is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.
Swiss Re 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Swiss Re are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Swiss Re may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Invesco Advantage and Swiss Re Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Invesco Advantage and Swiss Re

The main advantage of trading using opposite Invesco Advantage and Swiss Re positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Advantage position performs unexpectedly, Swiss Re 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 Swiss Re will offset losses from the drop in Swiss Re's long position.
The idea behind Invesco Advantage MIT and Swiss Re pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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