Correlation Between Invesco High and VHAI
Can any of the company-specific risk be diversified away by investing in both Invesco High and VHAI 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 High and VHAI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco High Yield and VHAI, you can compare the effects of market volatilities on Invesco High and VHAI 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 High with a short position of VHAI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco High and VHAI.
Diversification Opportunities for Invesco High and VHAI
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Invesco and VHAI is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Invesco High Yield and VHAI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VHAI and Invesco High 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 High Yield are associated (or correlated) with VHAI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VHAI has no effect on the direction of Invesco High i.e., Invesco High and VHAI go up and down completely randomly.
Pair Corralation between Invesco High and VHAI
Assuming the 90 days horizon Invesco High Yield is expected to generate 0.02 times more return on investment than VHAI. However, Invesco High Yield is 58.08 times less risky than VHAI. It trades about 0.15 of its potential returns per unit of risk. VHAI is currently generating about -0.1 per unit of risk. If you would invest 357.00 in Invesco High Yield on September 2, 2024 and sell it today you would earn a total of 2.00 from holding Invesco High Yield or generate 0.56% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 95.24% |
Values | Daily Returns |
Invesco High Yield vs. VHAI
Performance |
Timeline |
Invesco High Yield |
VHAI |
Invesco High and VHAI Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Invesco High and VHAI
The main advantage of trading using opposite Invesco High and VHAI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco High position performs unexpectedly, VHAI 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 VHAI will offset losses from the drop in VHAI's long position.Invesco High vs. Jennison Natural Resources | Invesco High vs. Energy Basic Materials | Invesco High vs. Franklin Natural Resources | Invesco High vs. Short Oil Gas |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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