Correlation Between Astar and Invesco Small

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

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

Diversification Opportunities for Astar and Invesco Small

0.35

Correlation Coefficient

Astar  Invesco Small

Weak diversification

The 3 months correlation between Astar and Invesco is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Invesco Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Small Cap 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 Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Small Cap has no effect on the direction of Astar i.e., Astar and Invesco Small go up and down completely randomly.

Pair Corralation between Astar and Invesco Small

Assuming the 90 days trading horizon Astar is expected to under-perform the Invesco Small. In addition to that, Astar is 3.8 times more volatile than Invesco Small Cap. It trades about -0.15 of its total potential returns per unit of risk. Invesco Small Cap is currently generating about -0.06 per unit of volatility. If you would invest  1,593  in Invesco Small Cap on December 20, 2024 and sell it today you would lose (86.00) from holding Invesco Small Cap or give up 5.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Astar  vs.  Invesco Small Cap

Astar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Astar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Astar shareholders.

Invesco Small Cap

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Astar and Invesco Small

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

The idea behind Astar and Invesco Small Cap 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.