Correlation Between BlackRock New and Invesco Trust

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

By analyzing existing cross correlation between BlackRock New York and Invesco Trust For, you can compare the effects of market volatilities on BlackRock New and Invesco Trust 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 BlackRock New with a short position of Invesco Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock New and Invesco Trust.

Diversification Opportunities for BlackRock New and Invesco Trust

0.74

Correlation Coefficient

BlackRock New  Invesco Trust

Poor diversification

The 3 months correlation between BlackRock and Invesco is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock New York and Invesco Trust For in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Trust For and BlackRock New 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 BlackRock New York are associated (or correlated) with Invesco Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Trust For has no effect on the direction of BlackRock New i.e., BlackRock New and Invesco Trust go up and down completely randomly.

Pair Corralation between BlackRock New and Invesco Trust

Considering the 90-day investment horizon BlackRock New York is expected to generate 0.76 times more return on investment than Invesco Trust. However, BlackRock New York is 1.32 times less risky than Invesco Trust. It trades about -0.02 of its potential returns per unit of risk. Invesco Trust For is currently generating about -0.12 per unit of risk. If you would invest  1,061  in BlackRock New York on November 29, 2024 and sell it today you would lose (8.00) from holding BlackRock New York or give up 0.75% of portfolio value over 90 days.

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

BlackRock New York  vs.  Invesco Trust For

BlackRock New York

Risk-Adjusted Performance

Very Weak

Over the last 90 days BlackRock New York has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, BlackRock New is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Invesco Trust For

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco Trust For has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Invesco Trust is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BlackRock New and Invesco Trust

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

The idea behind BlackRock New York and Invesco Trust For 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.