Correlation Between Invesco Plc and Carlyle

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

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

Diversification Opportunities for Invesco Plc and Carlyle

0.04

Correlation Coefficient

Invesco Plc  Carlyle

Significant diversification

The 3 months correlation between Invesco and Carlyle is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Plc and Carlyle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlyle Group and Invesco Plc 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 Plc are associated (or correlated) with Carlyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlyle Group has no effect on the direction of Invesco Plc i.e., Invesco Plc and Carlyle go up and down completely randomly.

Pair Corralation between Invesco Plc and Carlyle

Considering the 90-day investment horizon Invesco Plc is expected to under-perform the Carlyle. In addition to that, Invesco Plc is 1.04 times more volatile than Carlyle Group. It trades about -0.05 of its total potential returns per unit of risk. Carlyle Group is currently generating about 0.15 per unit of volatility. If you would invest  3,942  in Carlyle Group on January 24, 2024 and sell it today you would earn a total of  691.00  from holding Carlyle Group or generate 17.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Invesco Plc  vs.  Carlyle Group

Invesco Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Invesco Plc is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Carlyle Group

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carlyle Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Carlyle reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Invesco Plc and Carlyle

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

The idea behind Invesco Plc and Carlyle Group 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.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.