Correlation Between Invesco Advantage and Invesco Trust
Can any of the company-specific risk be diversified away by investing in both Invesco Advantage and Invesco Trust 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 Invesco Trust 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 Invesco Trust For, you can compare the effects of market volatilities on Invesco Advantage and Invesco Trust 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 Invesco Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Advantage and Invesco Trust.
Diversification Opportunities for Invesco Advantage and Invesco Trust
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and Invesco is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Advantage MIT and Invesco Trust For in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Trust For 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 Invesco Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Trust For has no effect on the direction of Invesco Advantage i.e., Invesco Advantage and Invesco Trust go up and down completely randomly.
Pair Corralation between Invesco Advantage and Invesco Trust
Considering the 90-day investment horizon Invesco Advantage MIT is expected to generate 1.02 times more return on investment than Invesco Trust. However, Invesco Advantage is 1.02 times more volatile than Invesco Trust For. It trades about 0.05 of its potential returns per unit of risk. Invesco Trust For is currently generating about 0.01 per unit of risk. If you would invest 880.00 in Invesco Advantage MIT on August 23, 2024 and sell it today you would earn a total of 12.50 from holding Invesco Advantage MIT or generate 1.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Advantage MIT vs. Invesco Trust For
Performance |
| Timeline |
| Invesco Advantage MIT |
| Invesco Trust For |
Invesco Advantage and Invesco Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Advantage and Invesco Trust
The main advantage of trading using opposite Invesco Advantage and Invesco Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Advantage position performs unexpectedly, Invesco Trust 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 Trust will offset losses from the drop in Invesco Trust's long position.| Invesco Advantage vs. Pioneer Floating Rate | Invesco Advantage vs. The Gabelli Equity | Invesco Advantage vs. Pioneer Municipal High | Invesco Advantage vs. Nuveen Global High |
| Invesco Trust vs. Pioneer Floating Rate | Invesco Trust vs. The Gabelli Equity | Invesco Trust vs. Pioneer Municipal High | Invesco Trust vs. Nuveen Global High |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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