Correlation Between Invesco Variable and PIMCO Enhanced
Can any of the company-specific risk be diversified away by investing in both Invesco Variable and PIMCO Enhanced 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 PIMCO Enhanced 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 PIMCO Enhanced Low, you can compare the effects of market volatilities on Invesco Variable and PIMCO Enhanced 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 PIMCO Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Variable and PIMCO Enhanced.
Diversification Opportunities for Invesco Variable and PIMCO Enhanced
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and PIMCO is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Variable Rate and PIMCO Enhanced Low in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Enhanced Low 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 PIMCO Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Enhanced Low has no effect on the direction of Invesco Variable i.e., Invesco Variable and PIMCO Enhanced go up and down completely randomly.
Pair Corralation between Invesco Variable and PIMCO Enhanced
Given the investment horizon of 90 days Invesco Variable Rate is expected to generate 0.94 times more return on investment than PIMCO Enhanced. However, Invesco Variable Rate is 1.07 times less risky than PIMCO Enhanced. It trades about -0.02 of its potential returns per unit of risk. PIMCO Enhanced Low is currently generating about -0.1 per unit of risk. If you would invest 2,503 in Invesco Variable Rate on January 10, 2025 and sell it today you would lose (2.00) from holding Invesco Variable Rate or give up 0.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Variable Rate vs. PIMCO Enhanced Low
Performance |
| Timeline |
| Invesco Variable Rate |
| PIMCO Enhanced Low |
Invesco Variable and PIMCO Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Variable and PIMCO Enhanced
The main advantage of trading using opposite Invesco Variable and PIMCO Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Variable position performs unexpectedly, PIMCO Enhanced 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 PIMCO Enhanced will offset losses from the drop in PIMCO Enhanced's long position.| Invesco Variable vs. SPDR SSgA Ultra | Invesco Variable vs. FlexShares iBoxx 3 Year | Invesco Variable vs. FlexShares iBoxx 5 Year | Invesco Variable vs. PIMCO Enhanced Low |
| PIMCO Enhanced vs. iShares 5 10 Year | PIMCO Enhanced vs. iShares 0 5 Year | PIMCO Enhanced vs. SPDR Barclays Short | PIMCO Enhanced vs. iShares Core Total |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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