Correlation Between Invesco Global and Invesco JPX

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

By analyzing existing cross correlation between Invesco Global Buyback and Invesco JPX Nikkei 400, you can compare the effects of market volatilities on Invesco Global and Invesco JPX 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 Global with a short position of Invesco JPX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Global and Invesco JPX.

Diversification Opportunities for Invesco Global and Invesco JPX

0.76

Correlation Coefficient

Invesco Global  Invesco JPX

Poor diversification

The 3 months correlation between Invesco and Invesco is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Global Buyback and Invesco JPX Nikkei 400 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco JPX Nikkei and Invesco Global 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 Global Buyback are associated (or correlated) with Invesco JPX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco JPX Nikkei has no effect on the direction of Invesco Global i.e., Invesco Global and Invesco JPX go up and down completely randomly.

Pair Corralation between Invesco Global and Invesco JPX

Assuming the 90 days trading horizon Invesco Global is expected to generate 1.02 times less return on investment than Invesco JPX. But when comparing it to its historical volatility, Invesco Global Buyback is 1.07 times less risky than Invesco JPX. It trades about 0.04 of its potential returns per unit of risk. Invesco JPX Nikkei 400 is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  18,752  in Invesco JPX Nikkei 400 on December 24, 2024 and sell it today you would earn a total of  336.00  from holding Invesco JPX Nikkei 400 or generate 1.79% return on investment over 90 days.

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

Invesco Global Buyback  vs.  Invesco JPX Nikkei 400

Invesco Global Buyback

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Global Buyback are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Invesco Global is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Invesco JPX Nikkei

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco JPX Nikkei 400 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Invesco JPX is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Invesco Global and Invesco JPX

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

The idea behind Invesco Global Buyback and Invesco JPX Nikkei 400 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.