Correlation Between Invesco Disciplined and Matthews Pacific

Can any of the company-specific risk be diversified away by investing in both Invesco Disciplined and Matthews Pacific 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 Matthews Pacific 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 Matthews Pacific Tiger, you can compare the effects of market volatilities on Invesco Disciplined and Matthews Pacific 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 Matthews Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Disciplined and Matthews Pacific.

Diversification Opportunities for Invesco Disciplined and Matthews Pacific

0.87

Correlation Coefficient

Invesco Disciplined  Matthews Pacific

Very poor diversification

The 3 months correlation between Invesco and Matthews is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Disciplined Equity and Matthews Pacific Tiger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews Pacific Tiger 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 Matthews Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews Pacific Tiger has no effect on the direction of Invesco Disciplined i.e., Invesco Disciplined and Matthews Pacific go up and down completely randomly.

Pair Corralation between Invesco Disciplined and Matthews Pacific

Assuming the 90 days horizon Invesco Disciplined Equity is expected to generate 0.75 times more return on investment than Matthews Pacific. However, Invesco Disciplined Equity is 1.34 times less risky than Matthews Pacific. It trades about 0.08 of its potential returns per unit of risk. Matthews Pacific Tiger is currently generating about -0.01 per unit of risk. If you would invest  2,326  in Invesco Disciplined Equity on December 2, 2024 and sell it today you would earn a total of  830.00  from holding Invesco Disciplined Equity or generate 35.68% return on investment over 90 days.

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

Invesco Disciplined Equity  vs.  Matthews Pacific Tiger

Invesco Disciplined

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco Disciplined Equity 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.

Matthews Pacific Tiger

Risk-Adjusted Performance

Very Weak

Over the last 90 days Matthews Pacific Tiger has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Invesco Disciplined and Matthews Pacific

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

The idea behind Invesco Disciplined Equity and Matthews Pacific Tiger 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.