Correlation Between Invesco Variable and First Trust
Can any of the company-specific risk be diversified away by investing in both Invesco Variable and First 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 Variable and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Variable Rate and First Trust Multi, you can compare the effects of market volatilities on Invesco Variable and First 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 Variable with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Variable and First Trust.
Diversification Opportunities for Invesco Variable and First Trust
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and First is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Variable Rate and First Trust Multi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Multi and Invesco Variable 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 Variable Rate are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Multi has no effect on the direction of Invesco Variable i.e., Invesco Variable and First Trust go up and down completely randomly.
Pair Corralation between Invesco Variable and First Trust
Given the investment horizon of 90 days Invesco Variable is expected to generate 10.6 times less return on investment than First Trust. But when comparing it to its historical volatility, Invesco Variable Rate is 26.19 times less risky than First Trust. It trades about 0.61 of its potential returns per unit of risk. First Trust Multi is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 12,811 in First Trust Multi on August 28, 2024 and sell it today you would earn a total of 2,137 from holding First Trust Multi or generate 16.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Variable Rate vs. First Trust Multi
Performance |
| Timeline |
| Invesco Variable Rate |
| First Trust Multi |
Invesco Variable and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Variable and First Trust
The main advantage of trading using opposite Invesco Variable and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Variable position performs unexpectedly, First 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 First Trust will offset losses from the drop in First Trust's long position.| Invesco Variable vs. First Trust Low | Invesco Variable vs. First Trust Senior | Invesco Variable vs. First Trust TCW | Invesco Variable vs. First Trust Tactical |
| First Trust vs. First Trust Multi | First Trust vs. First Trust Small | First Trust vs. First Trust Large | First Trust vs. First Trust Large |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |