Correlation Between Invesco Disciplined and Frontier Mfg

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

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

Diversification Opportunities for Invesco Disciplined and Frontier Mfg

-0.37

Correlation Coefficient

Invesco Disciplined  Frontier Mfg

Very good diversification

The 3 months correlation between Invesco and Frontier is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Disciplined Equity and Frontier Mfg E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Mfg E and Invesco Disciplined 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 Invesco Disciplined Equity are associated (or correlated) with Frontier Mfg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Mfg E has no effect on the direction of Invesco Disciplined i.e., Invesco Disciplined and Frontier Mfg go up and down completely randomly.

Pair Corralation between Invesco Disciplined and Frontier Mfg

Assuming the 90 days horizon Invesco Disciplined Equity is expected to generate 1.05 times more return on investment than Frontier Mfg. However, Invesco Disciplined is 1.05 times more volatile than Frontier Mfg E. It trades about 0.18 of its potential returns per unit of risk. Frontier Mfg E is currently generating about 0.01 per unit of risk. If you would invest  3,167  in Invesco Disciplined Equity on September 4, 2024 and sell it today you would earn a total of  245.00  from holding Invesco Disciplined Equity or generate 7.74% return on investment over 90 days.

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

Invesco Disciplined Equity  vs.  Frontier Mfg E

Invesco Disciplined

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Disciplined Equity are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Invesco Disciplined may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Frontier Mfg E

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Invesco Disciplined and Frontier Mfg

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

The idea behind Invesco Disciplined Equity and Frontier Mfg E 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.