Correlation Between Eafe Fund and Invesco International
Can any of the company-specific risk be diversified away by investing in both Eafe Fund and Invesco International 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 Eafe Fund and Invesco International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Eafe Fund and Invesco International Growth, you can compare the effects of market volatilities on Eafe Fund and Invesco International 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 Eafe Fund with a short position of Invesco International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eafe Fund and Invesco International.
Diversification Opportunities for Eafe Fund and Invesco International
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Eafe and Invesco is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding The Eafe Fund and Invesco International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco International and Eafe Fund 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 The Eafe Fund are associated (or correlated) with Invesco International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco International has no effect on the direction of Eafe Fund i.e., Eafe Fund and Invesco International go up and down completely randomly.
Pair Corralation between Eafe Fund and Invesco International
Assuming the 90 days horizon The Eafe Fund is expected to generate 1.51 times more return on investment than Invesco International. However, Eafe Fund is 1.51 times more volatile than Invesco International Growth. It trades about -0.12 of its potential returns per unit of risk. Invesco International Growth is currently generating about -0.19 per unit of risk. If you would invest 1,293 in The Eafe Fund on January 26, 2024 and sell it today you would lose (38.00) from holding The Eafe Fund or give up 2.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Eafe Fund vs. Invesco International Growth
Performance |
| Timeline |
| Eafe Fund |
| Invesco International |
Eafe Fund and Invesco International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eafe Fund and Invesco International
The main advantage of trading using opposite Eafe Fund and Invesco International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eafe Fund position performs unexpectedly, Invesco International 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 Invesco International will offset losses from the drop in Invesco International's long position.| Eafe Fund vs. Fidelity Small Cap | Eafe Fund vs. Fidelity Advisor Mid | Eafe Fund vs. Aquagold International | Eafe Fund vs. Morningstar Unconstrained Allocation |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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