Correlation Between 361 Global and Invesco Short

Can any of the company-specific risk be diversified away by investing in both 361 Global and Invesco Short 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 361 Global and Invesco Short into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 361 Global Longshort and Invesco Short Term, you can compare the effects of market volatilities on 361 Global and Invesco Short 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 361 Global with a short position of Invesco Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of 361 Global and Invesco Short.

Diversification Opportunities for 361 Global and Invesco Short

0.38

Correlation Coefficient

361 Global  Invesco Short

Weak diversification

The 3 months correlation between 361 and Invesco is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding 361 Global Longshort and Invesco Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Short Term and 361 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 361 Global Longshort are associated (or correlated) with Invesco Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Short Term has no effect on the direction of 361 Global i.e., 361 Global and Invesco Short go up and down completely randomly.

Pair Corralation between 361 Global and Invesco Short

Assuming the 90 days horizon 361 Global Longshort is expected to under-perform the Invesco Short. In addition to that, 361 Global is 4.65 times more volatile than Invesco Short Term. It trades about -0.19 of its total potential returns per unit of risk. Invesco Short Term is currently generating about -0.1 per unit of volatility. If you would invest  812.00  in Invesco Short Term on September 30, 2024 and sell it today you would lose (6.00) from holding Invesco Short Term or give up 0.74% of portfolio value over 90 days.

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

361 Global Longshort  vs.  Invesco Short Term

361 Global Longshort

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 361 Global Longshort has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Invesco Short Term

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with 361 Global and Invesco Short

The main advantage of trading using opposite 361 Global and Invesco Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 361 Global position performs unexpectedly, Invesco Short 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 Short will offset losses from the drop in Invesco Short's long position.

The idea behind 361 Global Longshort and Invesco Short Term 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.