Correlation Between Invesco Global and IShares Convertible
Can any of the company-specific risk be diversified away by investing in both Invesco Global and IShares Convertible 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 Global and IShares Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Global Short and iShares Convertible Bond, you can compare the effects of market volatilities on Invesco Global and IShares Convertible 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 Global with a short position of IShares Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Global and IShares Convertible.
Diversification Opportunities for Invesco Global and IShares Convertible
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and IShares is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Global Short and iShares Convertible Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Convertible Bond and Invesco Global 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 Global Short are associated (or correlated) with IShares Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Convertible Bond has no effect on the direction of Invesco Global i.e., Invesco Global and IShares Convertible go up and down completely randomly.
Pair Corralation between Invesco Global and IShares Convertible
Given the investment horizon of 90 days Invesco Global Short is expected to generate 0.69 times more return on investment than IShares Convertible. However, Invesco Global Short is 1.44 times less risky than IShares Convertible. It trades about -0.15 of its potential returns per unit of risk. iShares Convertible Bond is currently generating about -0.23 per unit of risk. If you would invest 1,962 in Invesco Global Short on January 25, 2024 and sell it today you would lose (25.00) from holding Invesco Global Short or give up 1.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Global Short vs. iShares Convertible Bond
Performance |
| Timeline |
| Invesco Global Short |
| iShares Convertible Bond |
Invesco Global and IShares Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Global and IShares Convertible
The main advantage of trading using opposite Invesco Global and IShares Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Global position performs unexpectedly, IShares Convertible 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 IShares Convertible will offset losses from the drop in IShares Convertible's long position.| Invesco Global vs. iShares iBoxx Investment | Invesco Global vs. iShares TIPS Bond | Invesco Global vs. iShares 20 Year | Invesco Global vs. iShares JP Morgan |
| IShares Convertible vs. Invesco Senior Loan | IShares Convertible vs. SPDR Bloomberg Short | IShares Convertible vs. Invesco Emerging Markets | IShares Convertible vs. SPDR Blackstone Senior |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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