Correlation Between Invesco International and Amg Yacktman

Can any of the company-specific risk be diversified away by investing in both Invesco International and Amg Yacktman 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 Amg Yacktman 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 Amg Yacktman Focused, you can compare the effects of market volatilities on Invesco International and Amg Yacktman 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 Amg Yacktman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco International and Amg Yacktman.

Diversification Opportunities for Invesco International and Amg Yacktman

0.9

Correlation Coefficient

Invesco International  Amg Yacktman

Almost no diversification

The 3 months correlation between Invesco and Amg is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Invesco International Growth and Amg Yacktman Focused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Yacktman Focused 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 Amg Yacktman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Yacktman Focused has no effect on the direction of Invesco International i.e., Invesco International and Amg Yacktman go up and down completely randomly.

Pair Corralation between Invesco International and Amg Yacktman

Assuming the 90 days horizon Invesco International Growth is expected to generate 0.87 times more return on investment than Amg Yacktman. However, Invesco International Growth is 1.15 times less risky than Amg Yacktman. It trades about -0.17 of its potential returns per unit of risk. Amg Yacktman Focused is currently generating about -0.17 per unit of risk. If you would invest  2,464  in Invesco International Growth on October 10, 2024 and sell it today you would lose (304.00) from holding Invesco International Growth or give up 12.34% of portfolio value over 90 days.

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

Invesco International Growth  vs.  Amg Yacktman Focused

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 weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Amg Yacktman Focused

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amg Yacktman Focused has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Invesco International and Amg Yacktman

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

The idea behind Invesco International Growth and Amg Yacktman Focused 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.