Correlation Between Invesco European and Voya Government

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

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

Diversification Opportunities for Invesco European and Voya Government

0.0

Correlation Coefficient

Invesco European  Voya Government

Pay attention - limited upside

The 3 months correlation between Invesco and Voya is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Invesco European Growth and Voya Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Government Money and Invesco European 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 European Growth are associated (or correlated) with Voya Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Government Money has no effect on the direction of Invesco European i.e., Invesco European and Voya Government go up and down completely randomly.

Pair Corralation between Invesco European and Voya Government

If you would invest  3,134  in Invesco European Growth on December 20, 2024 and sell it today you would earn a total of  281.00  from holding Invesco European Growth or generate 8.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Invesco European Growth  vs.  Voya Government Money

Invesco European Growth

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco European Growth are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Invesco European may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Voya Government Money

Risk-Adjusted Performance

Very Weak

Over the last 90 days Voya Government Money has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Voya Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Invesco European and Voya Government

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

The idea behind Invesco European Growth and Voya Government Money 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.