diversifiable risk of combining Invesco Energy and Global Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Energy Fund and Global Real Estate, you can compare the effects of market volatilities on Invesco Energy and Global Real 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 Energy with a short position of Global Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Energy and Global Real.
Diversification Opportunities for Invesco Energy and Global Real
Pair Corralation between Invesco Energy and Global Real
Assuming the 90 days horizon Invesco Energy Fund is expected to generate 1.44 times more return on investment than Global Real. However, Invesco Energy is 1.44 times more volatile than Global Real Estate. It trades about 0.03 of its potential returns per unit of risk. Global Real Estate is currently generating about -0.02 per unit of risk. If you would invest 2,007 in Invesco Energy Fund on December 3, 2023 and sell it today you would earn a total of 379.00 from holding Invesco Energy Fund or generate 18.88% return on investment over 90 days.
INVESCO ENERGY FUND vs. GLOBAL REAL ESTATE
Invesco Energy and Global Real Volatility Contrast
Pair Trading with Invesco Energy and Global RealThe main advantage of trading using opposite Invesco Energy and Global Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Energy position performs unexpectedly, Global Real 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 Global Real will offset losses from the drop in Global Real's long position. The idea behind Invesco Energy Fund and Global Real Estate 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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