Correlation Between DFS Furniture and Invesco Physical

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

By analyzing existing cross correlation between DFS Furniture PLC and Invesco Physical Silver, you can compare the effects of market volatilities on DFS Furniture and Invesco Physical 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 DFS Furniture with a short position of Invesco Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and Invesco Physical.

Diversification Opportunities for DFS Furniture and Invesco Physical

-0.27

Correlation Coefficient

DFS Furniture  Invesco Physical

Very good diversification

The 3 months correlation between DFS and Invesco is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and Invesco Physical Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Physical Silver and DFS Furniture 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 DFS Furniture PLC are associated (or correlated) with Invesco Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Physical Silver has no effect on the direction of DFS Furniture i.e., DFS Furniture and Invesco Physical go up and down completely randomly.

Pair Corralation between DFS Furniture and Invesco Physical

Assuming the 90 days trading horizon DFS Furniture is expected to generate 1.05 times less return on investment than Invesco Physical. In addition to that, DFS Furniture is 1.13 times more volatile than Invesco Physical Silver. It trades about 0.05 of its total potential returns per unit of risk. Invesco Physical Silver is currently generating about 0.06 per unit of volatility. If you would invest  2,203  in Invesco Physical Silver on October 5, 2024 and sell it today you would earn a total of  616.00  from holding Invesco Physical Silver or generate 27.96% return on investment over 90 days.

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

DFS Furniture PLC  vs.  Invesco Physical Silver

DFS Furniture PLC

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DFS Furniture PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, DFS Furniture may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Invesco Physical Silver

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with DFS Furniture and Invesco Physical

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

The idea behind DFS Furniture PLC and Invesco Physical Silver 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.