Correlation Between Distoken Acquisition and Invesco Value

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

By analyzing existing cross correlation between Distoken Acquisition and Invesco Value Municipal, you can compare the effects of market volatilities on Distoken Acquisition and Invesco Value 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 Distoken Acquisition with a short position of Invesco Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Distoken Acquisition and Invesco Value.

Diversification Opportunities for Distoken Acquisition and Invesco Value

-0.55

Correlation Coefficient

Distoken Acquisition  Invesco Value

Excellent diversification

The 3 months correlation between Distoken and Invesco is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Distoken Acquisition and Invesco Value Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Value Municipal and Distoken Acquisition 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 Distoken Acquisition are associated (or correlated) with Invesco Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Value Municipal has no effect on the direction of Distoken Acquisition i.e., Distoken Acquisition and Invesco Value go up and down completely randomly.

Pair Corralation between Distoken Acquisition and Invesco Value

Assuming the 90 days horizon Distoken Acquisition is expected to generate 17.39 times more return on investment than Invesco Value. However, Distoken Acquisition is 17.39 times more volatile than Invesco Value Municipal. It trades about 0.05 of its potential returns per unit of risk. Invesco Value Municipal is currently generating about 0.01 per unit of risk. If you would invest  11.00  in Distoken Acquisition on August 31, 2024 and sell it today you would earn a total of  0.00  from holding Distoken Acquisition or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	19.05%
Values	Daily Returns

Distoken Acquisition  vs.  Invesco Value Municipal

Distoken Acquisition

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Distoken Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak basic indicators, Distoken Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Invesco Value Municipal

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Value Municipal are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Invesco Value is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Distoken Acquisition and Invesco Value

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

The idea behind Distoken Acquisition and Invesco Value Municipal 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.