Correlation Between Invesco Exchange and IShares IBoxx

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

By analyzing existing cross correlation between Invesco Exchange Traded Self Indexed and iShares iBoxx High, you can compare the effects of market volatilities on Invesco Exchange and IShares IBoxx 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 Exchange with a short position of IShares IBoxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Exchange and IShares IBoxx.

Diversification Opportunities for Invesco Exchange and IShares IBoxx

0.82

Correlation Coefficient

Invesco Exchange  IShares IBoxx

Very poor diversification

The 3 months correlation between Invesco and IShares is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Exchange Traded Self I and iShares iBoxx High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares iBoxx High and Invesco Exchange 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 Exchange Traded Self Indexed are associated (or correlated) with IShares IBoxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares iBoxx High has no effect on the direction of Invesco Exchange i.e., Invesco Exchange and IShares IBoxx go up and down completely randomly.

Pair Corralation between Invesco Exchange and IShares IBoxx

Given the investment horizon of 90 days Invesco Exchange Traded Self Indexed is expected to generate 1.2 times more return on investment than IShares IBoxx. However, Invesco Exchange is 1.2 times more volatile than iShares iBoxx High. It trades about 0.08 of its potential returns per unit of risk. iShares iBoxx High is currently generating about 0.09 per unit of risk. If you would invest  2,130  in Invesco Exchange Traded Self Indexed on September 26, 2024 and sell it today you would earn a total of  436.00  from holding Invesco Exchange Traded Self Indexed or generate 20.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Invesco Exchange Traded Self I  vs.  iShares iBoxx High

Invesco Exchange Traded

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Exchange Traded Self Indexed has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking indicators, Invesco Exchange is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

iShares iBoxx High

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares iBoxx High has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, IShares IBoxx is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Invesco Exchange and IShares IBoxx

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

The idea behind Invesco Exchange Traded Self Indexed and iShares iBoxx High 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.

Check out your portfolio center.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.