Correlation Between Invesco Convertible and Payden Floating

Can any of the company-specific risk be diversified away by investing in both Invesco Convertible and Payden Floating 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 Payden Floating 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 Payden Floating Rate, you can compare the effects of market volatilities on Invesco Convertible and Payden Floating 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 Payden Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Convertible and Payden Floating.

Diversification Opportunities for Invesco Convertible and Payden Floating

0.35

Correlation Coefficient

Invesco Convertible  Payden Floating

Weak diversification

The 3 months correlation between Invesco and Payden is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Vertible Securities and Payden Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Floating Rate 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 Payden Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Floating Rate has no effect on the direction of Invesco Convertible i.e., Invesco Convertible and Payden Floating go up and down completely randomly.

Pair Corralation between Invesco Convertible and Payden Floating

Assuming the 90 days horizon Invesco Vertible Securities is expected to generate 12.04 times more return on investment than Payden Floating. However, Invesco Convertible is 12.04 times more volatile than Payden Floating Rate. It trades about 0.11 of its potential returns per unit of risk. Payden Floating Rate is currently generating about 0.78 per unit of risk. If you would invest  2,413  in Invesco Vertible Securities on October 23, 2024 and sell it today you would earn a total of  28.00  from holding Invesco Vertible Securities or generate 1.16% return on investment over 90 days.

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

Invesco Vertible Securities  vs.  Payden Floating Rate

Invesco Vertible Sec

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Vertible Securities are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. 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.

Payden Floating Rate

Risk-Adjusted Performance

45 of 100

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in Payden Floating Rate are ranked lower than 45 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Payden Floating 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 Convertible and Payden Floating

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

The idea behind Invesco Vertible Securities and Payden Floating Rate 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.