Correlation Between Astor Longshort and Invesco Balanced

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

By analyzing existing cross correlation between Astor Longshort Fund and Invesco Balanced Risk Modity, you can compare the effects of market volatilities on Astor Longshort and Invesco Balanced 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 Astor Longshort with a short position of Invesco Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astor Longshort and Invesco Balanced.

Diversification Opportunities for Astor Longshort and Invesco Balanced

0.56

Correlation Coefficient

Astor Longshort  Invesco Balanced

Very weak diversification

The 3 months correlation between Astor and Invesco is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Astor Longshort Fund and Invesco Balanced Risk Modity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Balanced Risk and Astor Longshort 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 Astor Longshort Fund are associated (or correlated) with Invesco Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Balanced Risk has no effect on the direction of Astor Longshort i.e., Astor Longshort and Invesco Balanced go up and down completely randomly.

Pair Corralation between Astor Longshort and Invesco Balanced

Assuming the 90 days horizon Astor Longshort Fund is expected to generate 0.71 times more return on investment than Invesco Balanced. However, Astor Longshort Fund is 1.41 times less risky than Invesco Balanced. It trades about 0.04 of its potential returns per unit of risk. Invesco Balanced Risk Modity is currently generating about -0.01 per unit of risk. If you would invest  1,159  in Astor Longshort Fund on October 5, 2024 and sell it today you would earn a total of  112.00  from holding Astor Longshort Fund or generate 9.66% return on investment over 90 days.

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

Astor Longshort Fund  vs.  Invesco Balanced Risk Modity

Astor Longshort

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astor Longshort Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Invesco Balanced Risk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Balanced Risk Modity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Astor Longshort and Invesco Balanced

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

The idea behind Astor Longshort Fund and Invesco Balanced Risk Modity 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.