Correlation Between Invesco Global and IShares IBoxx
Can any of the company-specific risk be diversified away by investing in both Invesco Global and IShares IBoxx 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 IBoxx 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 iBoxx Investment, you can compare the effects of market volatilities on Invesco Global and IShares IBoxx 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 IBoxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Global and IShares IBoxx.
Diversification Opportunities for Invesco Global and IShares IBoxx
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Invesco and IShares is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Global Short and iShares iBoxx Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares iBoxx Investment 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 IBoxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares iBoxx Investment has no effect on the direction of Invesco Global i.e., Invesco Global and IShares IBoxx go up and down completely randomly.
Pair Corralation between Invesco Global and IShares IBoxx
Given the investment horizon of 90 days Invesco Global Short is expected to generate 0.58 times more return on investment than IShares IBoxx. However, Invesco Global Short is 1.73 times less risky than IShares IBoxx. It trades about 0.11 of its potential returns per unit of risk. iShares iBoxx Investment is currently generating about 0.0 per unit of risk. If you would invest 1,772 in Invesco Global Short on January 20, 2024 and sell it today you would earn a total of 169.00 from holding Invesco Global Short or generate 9.54% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 99.6% |
Values | Daily Returns |
Invesco Global Short vs. iShares iBoxx Investment
Performance |
Timeline |
Invesco Global Short |
iShares iBoxx Investment |
Invesco Global and IShares IBoxx Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Invesco Global and IShares IBoxx
The main advantage of trading using opposite Invesco Global and IShares IBoxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Global position performs unexpectedly, IShares IBoxx 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 IBoxx will offset losses from the drop in IShares IBoxx's long position.Invesco Global vs. Aquagold International | Invesco Global vs. Thrivent High Yield | Invesco Global vs. Morningstar Unconstrained Allocation | Invesco Global vs. High Yield Municipal Fund |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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