Correlation Between Invesco Trust and United Overseas
Can any of the company-specific risk be diversified away by investing in both Invesco Trust and United Overseas 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 United Overseas 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 United Overseas Bank, you can compare the effects of market volatilities on Invesco Trust and United Overseas 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 United Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Trust and United Overseas.
Diversification Opportunities for Invesco Trust and United Overseas
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Invesco and United is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Trust For and United Overseas Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Overseas Bank 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 United Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Overseas Bank has no effect on the direction of Invesco Trust i.e., Invesco Trust and United Overseas go up and down completely randomly.
Pair Corralation between Invesco Trust and United Overseas
Considering the 90-day investment horizon Invesco Trust is expected to generate 2.62 times less return on investment than United Overseas. But when comparing it to its historical volatility, Invesco Trust For is 2.26 times less risky than United Overseas. It trades about 0.13 of its potential returns per unit of risk. United Overseas Bank is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 4,419 in United Overseas Bank on September 3, 2024 and sell it today you would earn a total of 1,026 from holding United Overseas Bank or generate 23.22% 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. United Overseas Bank
Performance |
| Timeline |
| Invesco Trust For |
| United Overseas Bank |
Invesco Trust and United Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Trust and United Overseas
The main advantage of trading using opposite Invesco Trust and United Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Trust position performs unexpectedly, United Overseas 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 United Overseas will offset losses from the drop in United Overseas' 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 |
| United Overseas vs. Western Asset Global | United Overseas vs. Invesco Trust For | United Overseas vs. Logan Ridge Finance | United Overseas vs. Invesco Advantage MIT |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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