Correlation Between Invesco KBW and Sa Real

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

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

Diversification Opportunities for Invesco KBW and Sa Real

0.01

Correlation Coefficient

Invesco KBW  Sa Real

Significant diversification

The 3 months correlation between Invesco and SAREX is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Invesco KBW Bank and Sa Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sa Real Estate and Invesco KBW 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 KBW Bank are associated (or correlated) with Sa Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sa Real Estate has no effect on the direction of Invesco KBW i.e., Invesco KBW and Sa Real go up and down completely randomly.

Pair Corralation between Invesco KBW and Sa Real

Given the investment horizon of 90 days Invesco KBW Bank is expected to generate 1.27 times more return on investment than Sa Real. However, Invesco KBW is 1.27 times more volatile than Sa Real Estate. It trades about 0.01 of its potential returns per unit of risk. Sa Real Estate is currently generating about -0.01 per unit of risk. If you would invest  5,407  in Invesco KBW Bank on January 26, 2024 and sell it today you would lose (101.00) from holding Invesco KBW Bank or give up 1.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Invesco KBW Bank  vs.  Sa Real Estate

Invesco KBW Bank

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco KBW Bank are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Invesco KBW may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Sa Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sa Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Sa Real is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Invesco KBW and Sa Real

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

The idea behind Invesco KBW Bank and Sa 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.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.