Correlation Between Invesco Convertible and Dreyfus International

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

By analyzing existing cross correlation between Invesco Vertible Securities and Dreyfus International Equity, you can compare the effects of market volatilities on Invesco Convertible and Dreyfus International 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 Convertible with a short position of Dreyfus International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Convertible and Dreyfus International.

Diversification Opportunities for Invesco Convertible and Dreyfus International

-0.44

Correlation Coefficient

Invesco Convertible  Dreyfus International

Very good diversification

The 3 months correlation between Invesco and Dreyfus is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Vertible Securities and Dreyfus International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus International and Invesco Convertible 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 Vertible Securities are associated (or correlated) with Dreyfus International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus International has no effect on the direction of Invesco Convertible i.e., Invesco Convertible and Dreyfus International go up and down completely randomly.

Pair Corralation between Invesco Convertible and Dreyfus International

Assuming the 90 days horizon Invesco Vertible Securities is expected to under-perform the Dreyfus International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Invesco Vertible Securities is 1.24 times less risky than Dreyfus International. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Dreyfus International Equity is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  3,717  in Dreyfus International Equity on December 21, 2024 and sell it today you would earn a total of  457.00  from holding Dreyfus International Equity or generate 12.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Invesco Vertible Securities  vs.  Dreyfus International Equity

Invesco Vertible Sec

Risk-Adjusted Performance

Very Weak

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

Dreyfus International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus International Equity are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Dreyfus International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Invesco Convertible and Dreyfus International

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

The idea behind Invesco Vertible Securities and Dreyfus International Equity 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.