Correlation Between Invesco Global and CDSPI Global

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

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

Diversification Opportunities for Invesco Global and CDSPI Global

0.05

Correlation Coefficient

Invesco Global  CDSPI Global

Significant diversification

The 3 months correlation between Invesco and CDSPI is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Global Companies and CDSPI Global Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDSPI Global Growth and Invesco Global 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 Global Companies are associated (or correlated) with CDSPI Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDSPI Global Growth has no effect on the direction of Invesco Global i.e., Invesco Global and CDSPI Global go up and down completely randomly.

Pair Corralation between Invesco Global and CDSPI Global

Assuming the 90 days trading horizon Invesco Global Companies is expected to under-perform the CDSPI Global. In addition to that, Invesco Global is 2.08 times more volatile than CDSPI Global Growth. It trades about -0.23 of its total potential returns per unit of risk. CDSPI Global Growth is currently generating about 0.02 per unit of volatility. If you would invest  6,053  in CDSPI Global Growth on October 11, 2024 and sell it today you would earn a total of  11.00  from holding CDSPI Global Growth or generate 0.18% return on investment over 90 days.

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

Invesco Global Companies  vs.  CDSPI Global Growth

Invesco Global Companies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Global Companies has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Invesco Global is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

CDSPI Global Growth

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CDSPI Global Growth are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, CDSPI Global 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 Global and CDSPI Global

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

The idea behind Invesco Global Companies and CDSPI Global Growth 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.