Correlation Between Invesco Markets and Invesco Exchange

Can any of the company-specific risk be diversified away by investing in both Invesco Markets and Invesco Exchange 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 Markets and Invesco Exchange into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Invesco Markets Plc and Invesco Exchange Traded, you can compare the effects of market volatilities on Invesco Markets and Invesco Exchange 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 Markets with a short position of Invesco Exchange. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Markets and Invesco Exchange.

Diversification Opportunities for Invesco Markets and Invesco Exchange

0.57

Correlation Coefficient

Invesco Markets  Invesco Exchange

Very weak diversification

The 3 months correlation between Invesco and Invesco is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Markets Plc and Invesco Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Exchange Traded and Invesco Markets 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 Markets Plc are associated (or correlated) with Invesco Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Exchange Traded has no effect on the direction of Invesco Markets i.e., Invesco Markets and Invesco Exchange go up and down completely randomly.

Pair Corralation between Invesco Markets and Invesco Exchange

If you would invest  2,745  in Invesco Exchange Traded on February 22, 2024 and sell it today you would earn a total of  127.00  from holding Invesco Exchange Traded or generate 4.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.35%
Values	Daily Returns

Invesco Markets Plc  vs.  Invesco Exchange Traded

Invesco Markets Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Markets Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Invesco Markets is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Invesco Exchange Traded

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Exchange Traded are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Invesco Exchange may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Invesco Markets and Invesco Exchange

The main advantage of trading using opposite Invesco Markets and Invesco Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Markets position performs unexpectedly, Invesco Exchange 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 Exchange will offset losses from the drop in Invesco Exchange's long position.

The idea behind Invesco Markets Plc and Invesco Exchange Traded 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.