Correlation Between Ab Global and Invesco Asia

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

By analyzing existing cross correlation between Ab Global Bond and Invesco Asia Pacific, you can compare the effects of market volatilities on Ab Global and Invesco Asia 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 Ab Global with a short position of Invesco Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and Invesco Asia.

Diversification Opportunities for Ab Global and Invesco Asia

0.27

Correlation Coefficient

Ab Global  Invesco Asia

Modest diversification

The 3 months correlation between ANAGX and Invesco is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global Bond and Invesco Asia Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Asia Pacific and Ab Global 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 Ab Global Bond are associated (or correlated) with Invesco Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Asia Pacific has no effect on the direction of Ab Global i.e., Ab Global and Invesco Asia go up and down completely randomly.

Pair Corralation between Ab Global and Invesco Asia

Assuming the 90 days horizon Ab Global Bond is expected to generate 0.11 times more return on investment than Invesco Asia. However, Ab Global Bond is 9.36 times less risky than Invesco Asia. It trades about -0.55 of its potential returns per unit of risk. Invesco Asia Pacific is currently generating about -0.31 per unit of risk. If you would invest  697.00  in Ab Global Bond on October 11, 2024 and sell it today you would lose (14.00) from holding Ab Global Bond or give up 2.01% of portfolio value over 90 days.

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

Ab Global Bond  vs.  Invesco Asia Pacific

Ab Global Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab Global Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Ab Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Invesco Asia Pacific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Asia Pacific 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.

Pair Trading with Ab Global and Invesco Asia

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

The idea behind Ab Global Bond and Invesco Asia Pacific 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.