Correlation Between HL Multi and Invesco Health

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

By analyzing existing cross correlation between HL Multi Index Moderately and Invesco Health Care, you can compare the effects of market volatilities on HL Multi 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 HL Multi with a short position of Invesco Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of HL Multi and Invesco Health.

Diversification Opportunities for HL Multi and Invesco Health

-0.56

Correlation Coefficient

HL Multi  Invesco Health

Excellent diversification

The 3 months correlation between 0P0001RI3W and Invesco is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding HL Multi Index Moderately 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 HL Multi 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 HL Multi Index Moderately 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 HL Multi i.e., HL Multi and Invesco Health go up and down completely randomly.

Pair Corralation between HL Multi and Invesco Health

Assuming the 90 days trading horizon HL Multi Index Moderately is expected to generate 0.59 times more return on investment than Invesco Health. However, HL Multi Index Moderately is 1.71 times less risky than Invesco Health. It trades about 0.12 of its potential returns per unit of risk. Invesco Health Care is currently generating about -0.17 per unit of risk. If you would invest  11,694  in HL Multi Index Moderately on October 8, 2024 and sell it today you would earn a total of  398.00  from holding HL Multi Index Moderately or generate 3.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

HL Multi Index Moderately  vs.  Invesco Health Care

HL Multi Index

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HL Multi Index Moderately are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively invariable forward indicators, HL Multi is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

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 HL Multi and Invesco Health

The main advantage of trading using opposite HL Multi and Invesco Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HL Multi 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 HL Multi Index Moderately 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.