Correlation Between American Funds and Invesco Select
Can any of the company-specific risk be diversified away by investing in both American Funds and Invesco Select 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 American Funds and Invesco Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Growth and Invesco Select Risk, you can compare the effects of market volatilities on American Funds and Invesco Select 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 American Funds with a short position of Invesco Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Invesco Select.
Diversification Opportunities for American Funds and Invesco Select
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Invesco is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Growth and Invesco Select Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Select Risk and American Funds 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 American Funds Growth are associated (or correlated) with Invesco Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Select Risk has no effect on the direction of American Funds i.e., American Funds and Invesco Select go up and down completely randomly.
Pair Corralation between American Funds and Invesco Select
Assuming the 90 days horizon American Funds Growth is expected to generate 1.35 times more return on investment than Invesco Select. However, American Funds is 1.35 times more volatile than Invesco Select Risk. It trades about 0.01 of its potential returns per unit of risk. Invesco Select Risk is currently generating about 0.0 per unit of risk. If you would invest 2,251 in American Funds Growth on January 19, 2024 and sell it today you would earn a total of 8.00 from holding American Funds Growth or generate 0.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
American Funds Growth vs. Invesco Select Risk
Performance |
Timeline |
American Funds Growth |
Invesco Select Risk |
American Funds and Invesco Select Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Funds and Invesco Select
The main advantage of trading using opposite American Funds and Invesco Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Invesco Select 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 Select will offset losses from the drop in Invesco Select's long position.American Funds vs. American Funds Growth | American Funds vs. HUMANA INC | American Funds vs. Aquagold International | American Funds vs. Thrivent High Yield |
Invesco Select vs. American Funds Growth | Invesco Select vs. HUMANA INC | Invesco Select vs. Aquagold International | Invesco Select vs. Thrivent High Yield |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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