Correlation Between Invesco Health and GraniteShares
Can any of the company-specific risk be diversified away by investing in both Invesco Health and GraniteShares 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 Health and GraniteShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Health Care and GraniteShares 3x Short, you can compare the effects of market volatilities on Invesco Health and GraniteShares 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 Health with a short position of GraniteShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Health and GraniteShares.
Diversification Opportunities for Invesco Health and GraniteShares
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and GraniteShares is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Health Care and GraniteShares 3x Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares 3x Short and Invesco Health 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 Health Care are associated (or correlated) with GraniteShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GraniteShares 3x Short has no effect on the direction of Invesco Health i.e., Invesco Health and GraniteShares go up and down completely randomly.
Pair Corralation between Invesco Health and GraniteShares
Assuming the 90 days trading horizon Invesco Health Care is expected to generate 0.11 times more return on investment than GraniteShares. However, Invesco Health Care is 9.5 times less risky than GraniteShares. It trades about 0.04 of its potential returns per unit of risk. GraniteShares 3x Short is currently generating about -0.02 per unit of risk. If you would invest 64,209 in Invesco Health Care on August 31, 2024 and sell it today you would earn a total of 7,043 from holding Invesco Health Care or generate 10.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.58% |
| Values | Daily Returns |
Invesco Health Care vs. GraniteShares 3x Short
Performance |
| Timeline |
| Invesco Health Care |
| GraniteShares 3x Short |
Invesco Health and GraniteShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Health and GraniteShares
The main advantage of trading using opposite Invesco Health and GraniteShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Health position performs unexpectedly, GraniteShares 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 GraniteShares will offset losses from the drop in GraniteShares' long position.| Invesco Health vs. Invesco MSCI Emerging | Invesco Health vs. Invesco EURO STOXX | Invesco Health vs. Invesco Markets Plc | Invesco Health vs. Invesco FTSE RAFI |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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