Correlation Between Invesco American and Growth Fund
Can any of the company-specific risk be diversified away by investing in both Invesco American and Growth Fund 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 American and Growth Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco American Franchise and Growth Fund Of, you can compare the effects of market volatilities on Invesco American and Growth Fund 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 American with a short position of Growth Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco American and Growth Fund.
Diversification Opportunities for Invesco American and Growth Fund
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and Growth is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Invesco American Franchise and Growth Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund and Invesco American 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 American Franchise are associated (or correlated) with Growth Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund has no effect on the direction of Invesco American i.e., Invesco American and Growth Fund go up and down completely randomly.
Pair Corralation between Invesco American and Growth Fund
Assuming the 90 days horizon Invesco American Franchise is expected to under-perform the Growth Fund. In addition to that, Invesco American is 1.16 times more volatile than Growth Fund Of. It trades about -0.13 of its total potential returns per unit of risk. Growth Fund Of is currently generating about -0.11 per unit of volatility. If you would invest 6,722 in Growth Fund Of on January 19, 2024 and sell it today you would lose (142.00) from holding Growth Fund Of or give up 2.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco American Franchise vs. Growth Fund Of
Performance |
| Timeline |
| Invesco American Fra |
| Growth Fund |
Invesco American and Growth Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco American and Growth Fund
The main advantage of trading using opposite Invesco American and Growth Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco American position performs unexpectedly, Growth Fund 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 Growth Fund will offset losses from the drop in Growth Fund's long position.The idea behind Invesco American Franchise and Growth Fund Of pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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