Correlation Between Abrdn Bloomberg and Invesco Optimum

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

By analyzing existing cross correlation between abrdn Bloomberg All and Invesco Optimum Yield, you can compare the effects of market volatilities on Abrdn Bloomberg and Invesco Optimum 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 Abrdn Bloomberg with a short position of Invesco Optimum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abrdn Bloomberg and Invesco Optimum.

Diversification Opportunities for Abrdn Bloomberg and Invesco Optimum

0.85

Correlation Coefficient

Abrdn Bloomberg  Invesco Optimum

Very poor diversification

The 3 months correlation between Abrdn and Invesco is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding abrdn Bloomberg All and Invesco Optimum Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Optimum Yield and Abrdn Bloomberg 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 abrdn Bloomberg All are associated (or correlated) with Invesco Optimum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Optimum Yield has no effect on the direction of Abrdn Bloomberg i.e., Abrdn Bloomberg and Invesco Optimum go up and down completely randomly.

Pair Corralation between Abrdn Bloomberg and Invesco Optimum

Considering the 90-day investment horizon abrdn Bloomberg All is expected to generate 0.95 times more return on investment than Invesco Optimum. However, abrdn Bloomberg All is 1.05 times less risky than Invesco Optimum. It trades about 0.19 of its potential returns per unit of risk. Invesco Optimum Yield is currently generating about 0.11 per unit of risk. If you would invest  1,972  in abrdn Bloomberg All on December 28, 2024 and sell it today you would earn a total of  158.00  from holding abrdn Bloomberg All or generate 8.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

abrdn Bloomberg All  vs.  Invesco Optimum Yield

abrdn Bloomberg All

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in abrdn Bloomberg All are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Abrdn Bloomberg may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Invesco Optimum Yield

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Optimum Yield are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Invesco Optimum is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Abrdn Bloomberg and Invesco Optimum

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

The idea behind abrdn Bloomberg All and Invesco Optimum Yield 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.