Correlation Between Invesco International and Ivy High

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

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

Diversification Opportunities for Invesco International and Ivy High

0.39

Correlation Coefficient

Invesco International  Ivy High

Weak diversification

The 3 months correlation between Invesco and Ivy is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Invesco International Growth and Ivy High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy High Income and Invesco International 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 International Growth are associated (or correlated) with Ivy High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy High Income has no effect on the direction of Invesco International i.e., Invesco International and Ivy High go up and down completely randomly.

Pair Corralation between Invesco International and Ivy High

Assuming the 90 days horizon Invesco International is expected to generate 2.8 times less return on investment than Ivy High. In addition to that, Invesco International is 2.13 times more volatile than Ivy High Income. It trades about 0.01 of its total potential returns per unit of risk. Ivy High Income is currently generating about 0.07 per unit of volatility. If you would invest  527.00  in Ivy High Income on October 12, 2024 and sell it today you would earn a total of  71.00  from holding Ivy High Income or generate 13.47% return on investment over 90 days.

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

Invesco International Growth  vs.  Ivy High Income

Invesco International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco International Growth 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.

Ivy High Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ivy High Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Ivy High 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 International and Ivy High

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

The idea behind Invesco International Growth and Ivy High Income 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.