Correlation Between Invesco Floating and CONSTELLATION

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

By analyzing existing cross correlation between Invesco Floating Rate and CONSTELLATION ENERGY GROUP, you can compare the effects of market volatilities on Invesco Floating and CONSTELLATION 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 Floating with a short position of CONSTELLATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Floating and CONSTELLATION.

Diversification Opportunities for Invesco Floating and CONSTELLATION

-0.52

Correlation Coefficient

Invesco Floating  CONSTELLATION

Excellent diversification

The 3 months correlation between Invesco and CONSTELLATION is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Floating Rate and CONSTELLATION ENERGY GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSTELLATION ENERGY and Invesco Floating 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 Floating Rate are associated (or correlated) with CONSTELLATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONSTELLATION ENERGY has no effect on the direction of Invesco Floating i.e., Invesco Floating and CONSTELLATION go up and down completely randomly.

Pair Corralation between Invesco Floating and CONSTELLATION

Assuming the 90 days horizon Invesco Floating Rate is expected to generate 0.14 times more return on investment than CONSTELLATION. However, Invesco Floating Rate is 7.27 times less risky than CONSTELLATION. It trades about 0.17 of its potential returns per unit of risk. CONSTELLATION ENERGY GROUP is currently generating about 0.0 per unit of risk. If you would invest  562.00  in Invesco Floating Rate on October 3, 2024 and sell it today you would earn a total of  106.00  from holding Invesco Floating Rate or generate 18.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	72.58%
Values	Daily Returns

Invesco Floating Rate  vs.  CONSTELLATION ENERGY GROUP

Invesco Floating Rate

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Floating Rate are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Invesco Floating is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

CONSTELLATION ENERGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONSTELLATION ENERGY GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CONSTELLATION ENERGY GROUP investors.

Pair Trading with Invesco Floating and CONSTELLATION

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

The idea behind Invesco Floating Rate and CONSTELLATION ENERGY GROUP 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.