Correlation Between Alstria Office and Invesco Health

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

By analyzing existing cross correlation between alstria office REIT AG and Invesco Health Care, you can compare the effects of market volatilities on Alstria Office and Invesco Health 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 Alstria Office with a short position of Invesco Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alstria Office and Invesco Health.

Diversification Opportunities for Alstria Office and Invesco Health

-0.68

Correlation Coefficient

Alstria Office  Invesco Health

Excellent diversification

The 3 months correlation between Alstria and Invesco is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding alstria office REIT AG and Invesco Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Health Care and Alstria Office 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 alstria office REIT AG are associated (or correlated) with Invesco Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Health Care has no effect on the direction of Alstria Office i.e., Alstria Office and Invesco Health go up and down completely randomly.

Pair Corralation between Alstria Office and Invesco Health

Assuming the 90 days trading horizon alstria office REIT AG is expected to under-perform the Invesco Health. In addition to that, Alstria Office is 7.46 times more volatile than Invesco Health Care. It trades about -0.16 of its total potential returns per unit of risk. Invesco Health Care is currently generating about -0.3 per unit of volatility. If you would invest  71,308  in Invesco Health Care on October 4, 2024 and sell it today you would lose (4,196) from holding Invesco Health Care or give up 5.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

alstria office REIT AG  vs.  Invesco Health Care

alstria office REIT

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in alstria office REIT AG are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, Alstria Office disclosed solid returns over the last few months and may actually be approaching a breakup point.

Invesco Health Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Health Care has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with Alstria Office and Invesco Health

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

The idea behind alstria office REIT AG and Invesco Health Care 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.