Correlation Between Invesco High and VivoPower International

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

Diversification Opportunities for Invesco High and VivoPower International

-0.26

Correlation Coefficient

Invesco High  VivoPower International

Very good diversification

The 3 months correlation between Invesco and VivoPower is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Invesco High Yield and VivoPower International PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VivoPower International 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 VivoPower International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VivoPower International has no effect on the direction of Invesco High i.e., Invesco High and VivoPower International go up and down completely randomly.

Pair Corralation between Invesco High and VivoPower International

Assuming the 90 days horizon Invesco High is expected to generate 243.23 times less return on investment than VivoPower International. But when comparing it to its historical volatility, Invesco High Yield is 86.58 times less risky than VivoPower International. It trades about 0.05 of its potential returns per unit of risk. VivoPower International PLC is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  134.00  in VivoPower International PLC on December 30, 2024 and sell it today you would earn a total of  258.00  from holding VivoPower International PLC or generate 192.54% return on investment over 90 days.

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

Invesco High Yield  vs.  VivoPower International PLC

Invesco High Yield

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco High Yield are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Invesco High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

VivoPower International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VivoPower International PLC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, VivoPower International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Invesco High and VivoPower International

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

The idea behind Invesco High Yield and VivoPower International PLC 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.