Correlation Between Invesco Senior and California Bond
Can any of the company-specific risk be diversified away by investing in both Invesco Senior and California Bond 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 Senior and California Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Senior Loan and California Bond Fund, you can compare the effects of market volatilities on Invesco Senior and California Bond 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 Senior with a short position of California Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Senior and California Bond.
Diversification Opportunities for Invesco Senior and California Bond
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Invesco and California is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Senior Loan and California Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Bond and Invesco Senior 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 Senior Loan are associated (or correlated) with California Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Bond has no effect on the direction of Invesco Senior i.e., Invesco Senior and California Bond go up and down completely randomly.
Pair Corralation between Invesco Senior and California Bond
Assuming the 90 days horizon Invesco Senior Loan is not expected to generate positive returns. However, Invesco Senior Loan is 1.08 times less risky than California Bond. It waists most of its returns potential to compensate for thr risk taken. California Bond is generating about 0.44 per unit of risk. If you would invest 1,041 in California Bond Fund on September 13, 2024 and sell it today you would earn a total of 10.00 from holding California Bond Fund or generate 0.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Senior Loan vs. California Bond Fund
Performance |
| Timeline |
| Invesco Senior Loan |
| California Bond |
Invesco Senior and California Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Senior and California Bond
The main advantage of trading using opposite Invesco Senior and California Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Senior position performs unexpectedly, California Bond 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 California Bond will offset losses from the drop in California Bond's long position.| Invesco Senior vs. Payden Government Fund | Invesco Senior vs. Franklin Adjustable Government | Invesco Senior vs. Dws Government Money | Invesco Senior vs. Sit Government Securities |
| California Bond vs. Income Fund Income | California Bond vs. Usaa Nasdaq 100 | California Bond vs. Victory Diversified Stock | California Bond vs. Intermediate Term Bond Fund |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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