Correlation Between Invesco Balanced and Invesco Comstock

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

By analyzing existing cross correlation between Invesco Balanced Risk Modity and Invesco Stock Fund, you can compare the effects of market volatilities on Invesco Balanced and Invesco Comstock 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 Balanced with a short position of Invesco Comstock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Balanced and Invesco Comstock.

Diversification Opportunities for Invesco Balanced and Invesco Comstock

0.6

Correlation Coefficient

Invesco Balanced  Invesco Comstock

Poor diversification

The 3 months correlation between Invesco and Invesco is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Balanced Risk Modity and Invesco Stock Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Comstock and Invesco Balanced 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 Balanced Risk Modity are associated (or correlated) with Invesco Comstock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Comstock has no effect on the direction of Invesco Balanced i.e., Invesco Balanced and Invesco Comstock go up and down completely randomly.

Pair Corralation between Invesco Balanced and Invesco Comstock

Assuming the 90 days horizon Invesco Balanced is expected to generate 1.01 times less return on investment than Invesco Comstock. But when comparing it to its historical volatility, Invesco Balanced Risk Modity is 1.01 times less risky than Invesco Comstock. It trades about 0.3 of its potential returns per unit of risk. Invesco Stock Fund is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  2,893  in Invesco Stock Fund on October 26, 2024 and sell it today you would earn a total of  116.00  from holding Invesco Stock Fund or generate 4.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Invesco Balanced Risk Modity  vs.  Invesco Stock Fund

Invesco Balanced Risk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Balanced Risk Modity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Invesco Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Invesco Comstock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Stock Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Invesco Comstock 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 Balanced and Invesco Comstock

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

The idea behind Invesco Balanced Risk Modity and Invesco Stock Fund 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.