Correlation Between Ashtead Technology and Invesco Physical

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

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

Diversification Opportunities for Ashtead Technology and Invesco Physical

-0.32

Correlation Coefficient

Ashtead Technology  Invesco Physical

Very good diversification

The 3 months correlation between Ashtead and Invesco is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ashtead Technology Holdings and Invesco Physical Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Physical Gold and Ashtead Technology 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 Ashtead Technology Holdings are associated (or correlated) with Invesco Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Physical Gold has no effect on the direction of Ashtead Technology i.e., Ashtead Technology and Invesco Physical go up and down completely randomly.

Pair Corralation between Ashtead Technology and Invesco Physical

Assuming the 90 days trading horizon Ashtead Technology is expected to generate 7.21 times less return on investment than Invesco Physical. In addition to that, Ashtead Technology is 4.05 times more volatile than Invesco Physical Gold. It trades about 0.01 of its total potential returns per unit of risk. Invesco Physical Gold is currently generating about 0.36 per unit of volatility. If you would invest  25,045  in Invesco Physical Gold on December 29, 2024 and sell it today you would earn a total of  4,660  from holding Invesco Physical Gold or generate 18.61% return on investment over 90 days.

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

Ashtead Technology Holdings  vs.  Invesco Physical Gold

Ashtead Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ashtead Technology Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Ashtead Technology is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Invesco Physical Gold

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Physical Gold are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Invesco Physical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ashtead Technology and Invesco Physical

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

The idea behind Ashtead Technology Holdings and Invesco Physical Gold 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..