Correlation Between Allfunds and Invesco Physical

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

By analyzing existing cross correlation between Allfunds Group and Invesco Physical Gold, you can compare the effects of market volatilities on Allfunds and Invesco Physical 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 Allfunds with a short position of Invesco Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allfunds and Invesco Physical.

Diversification Opportunities for Allfunds and Invesco Physical

0.5

Correlation Coefficient

Allfunds  Invesco Physical

Very weak diversification

The 3 months correlation between Allfunds and Invesco is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Allfunds Group and Invesco Physical Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Physical Gold and Allfunds 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 Allfunds Group are associated (or correlated) with Invesco Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Physical Gold has no effect on the direction of Allfunds i.e., Allfunds and Invesco Physical go up and down completely randomly.

Pair Corralation between Allfunds and Invesco Physical

Assuming the 90 days trading horizon Allfunds is expected to generate 3.81 times less return on investment than Invesco Physical. In addition to that, Allfunds is 2.11 times more volatile than Invesco Physical Gold. It trades about 0.02 of its total potential returns per unit of risk. Invesco Physical Gold is currently generating about 0.16 per unit of volatility. If you would invest  22,393  in Invesco Physical Gold on September 14, 2024 and sell it today you would earn a total of  2,216  from holding Invesco Physical Gold or generate 9.9% return on investment over 90 days.

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

Allfunds Group  vs.  Invesco Physical Gold

Allfunds Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Allfunds Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Allfunds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Invesco Physical Gold

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Invesco Physical Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, Invesco Physical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Allfunds and Invesco Physical

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

The idea behind Allfunds Group and Invesco Physical Gold 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.