Correlation Between Invesco Disciplined and Virtus Global

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

Diversification Opportunities for Invesco Disciplined and Virtus Global

0.3

Correlation Coefficient

Invesco Disciplined  Virtus Global

Weak diversification

The 3 months correlation between Invesco and Virtus is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Disciplined Equity and Virtus Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Global Real 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 Virtus Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Global Real has no effect on the direction of Invesco Disciplined i.e., Invesco Disciplined and Virtus Global go up and down completely randomly.

Pair Corralation between Invesco Disciplined and Virtus Global

Assuming the 90 days horizon Invesco Disciplined Equity is expected to under-perform the Virtus Global. But the mutual fund apears to be less risky and, when comparing its historical volatility, Invesco Disciplined Equity is 1.0 times less risky than Virtus Global. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Virtus Global Real is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,362  in Virtus Global Real on December 30, 2024 and sell it today you would earn a total of  63.00  from holding Virtus Global Real or generate 1.87% return on investment over 90 days.

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

Invesco Disciplined Equity  vs.  Virtus Global Real

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 fairly strong forward indicators, Invesco Disciplined is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Virtus Global Real

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Global Real are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Virtus Global 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 Virtus Global

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

The idea behind Invesco Disciplined Equity and Virtus Global Real 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.