Correlation Between Astar and Invesco EURO

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

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

Diversification Opportunities for Astar and Invesco EURO

-0.66

Correlation Coefficient

Astar  Invesco EURO

Excellent diversification

The 3 months correlation between Astar and Invesco is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Invesco EURO STOXX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco EURO STOXX and Astar 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 Astar are associated (or correlated) with Invesco EURO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco EURO STOXX has no effect on the direction of Astar i.e., Astar and Invesco EURO go up and down completely randomly.

Pair Corralation between Astar and Invesco EURO

Assuming the 90 days trading horizon Astar is expected to generate 6.18 times more return on investment than Invesco EURO. However, Astar is 6.18 times more volatile than Invesco EURO STOXX. It trades about 0.04 of its potential returns per unit of risk. Invesco EURO STOXX is currently generating about 0.07 per unit of risk. If you would invest  4.70  in Astar on October 11, 2024 and sell it today you would earn a total of  1.42  from holding Astar or generate 30.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	59.76%
Values	Daily Returns

Astar  vs.  Invesco EURO STOXX

Astar

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Astar are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Astar may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Invesco EURO STOXX

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco EURO STOXX are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Invesco EURO is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Astar and Invesco EURO

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

The idea behind Astar and Invesco EURO STOXX 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.