Correlation Between Invesco Trust and Prospect Capital
Can any of the company-specific risk be diversified away by investing in both Invesco Trust and Prospect Capital 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 Trust and Prospect Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Trust For and Prospect Capital, you can compare the effects of market volatilities on Invesco Trust and Prospect Capital 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 Trust with a short position of Prospect Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Trust and Prospect Capital.
Diversification Opportunities for Invesco Trust and Prospect Capital
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Invesco and Prospect is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Trust For and Prospect Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prospect Capital and Invesco Trust 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 Trust For are associated (or correlated) with Prospect Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prospect Capital has no effect on the direction of Invesco Trust i.e., Invesco Trust and Prospect Capital go up and down completely randomly.
Pair Corralation between Invesco Trust and Prospect Capital
Considering the 90-day investment horizon Invesco Trust For is expected to generate 0.4 times more return on investment than Prospect Capital. However, Invesco Trust For is 2.5 times less risky than Prospect Capital. It trades about 0.05 of its potential returns per unit of risk. Prospect Capital is currently generating about -0.02 per unit of risk. If you would invest 963.00 in Invesco Trust For on August 24, 2024 and sell it today you would earn a total of 172.00 from holding Invesco Trust For or generate 17.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Trust For vs. Prospect Capital
Performance |
| Timeline |
| Invesco Trust For |
| Prospect Capital |
Invesco Trust and Prospect Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Trust and Prospect Capital
The main advantage of trading using opposite Invesco Trust and Prospect Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Trust position performs unexpectedly, Prospect Capital 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 Prospect Capital will offset losses from the drop in Prospect Capital's long position.| Invesco Trust vs. Pimco New York | Invesco Trust vs. Pimco New York | Invesco Trust vs. BlackRock New York | Invesco Trust vs. Invesco California Value |
| Prospect Capital vs. Gladstone Capital | Prospect Capital vs. Horizon Technology Finance | Prospect Capital vs. Gladstone Investment | Prospect Capital vs. Stellus Capital Investment |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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