Correlation Between Invesco Trust and American Balanced
Can any of the company-specific risk be diversified away by investing in both Invesco Trust and American Balanced 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 Trust and American Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Trust For and American Balanced Fund, you can compare the effects of market volatilities on Invesco Trust and American Balanced 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 Trust with a short position of American Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Trust and American Balanced.
Diversification Opportunities for Invesco Trust and American Balanced
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Invesco and American is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Trust For and American Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Balanced and Invesco Trust 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 Trust For are associated (or correlated) with American Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Balanced has no effect on the direction of Invesco Trust i.e., Invesco Trust and American Balanced go up and down completely randomly.
Pair Corralation between Invesco Trust and American Balanced
Assuming the 90 days horizon Invesco Trust For is expected to under-perform the American Balanced. But the mutual fund apears to be less risky and, when comparing its historical volatility, Invesco Trust For is 1.24 times less risky than American Balanced. The mutual fund trades about -0.24 of its potential returns per unit of risk. The American Balanced Fund is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 3,332 in American Balanced Fund on January 19, 2024 and sell it today you would lose (57.00) from holding American Balanced Fund or give up 1.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Trust For vs. American Balanced Fund
Performance |
| Timeline |
| Invesco Trust For |
| American Balanced |
Invesco Trust and American Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Trust and American Balanced
The main advantage of trading using opposite Invesco Trust and American Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Trust position performs unexpectedly, American Balanced 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 American Balanced will offset losses from the drop in American Balanced's long position.| Invesco Trust vs. Tekla Healthcare Investors | Invesco Trust vs. Tekla Life Sciences | Invesco Trust vs. Flaherty and Crumrine | Invesco Trust vs. Cohen And Steers |
| American Balanced vs. American Balanced | American Balanced vs. American Balanced Fund | American Balanced vs. American Balanced Fund | American Balanced vs. American Balanced Fund |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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