Correlation Between Invesco Actively and Xtrackers MSCI

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

By analyzing existing cross correlation between Invesco Actively Managed and Xtrackers MSCI Emerging, you can compare the effects of market volatilities on Invesco Actively and Xtrackers MSCI 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 Actively with a short position of Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Actively and Xtrackers MSCI.

Diversification Opportunities for Invesco Actively and Xtrackers MSCI

0.94

Correlation Coefficient

Invesco Actively  Xtrackers MSCI

Almost no diversification

The 3 months correlation between Invesco and Xtrackers is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Actively Managed and Xtrackers MSCI Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI Emerging and Invesco Actively 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 Actively Managed are associated (or correlated) with Xtrackers MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers MSCI Emerging has no effect on the direction of Invesco Actively i.e., Invesco Actively and Xtrackers MSCI go up and down completely randomly.

Pair Corralation between Invesco Actively and Xtrackers MSCI

Given the investment horizon of 90 days Invesco Actively is expected to generate 1.01 times less return on investment than Xtrackers MSCI. But when comparing it to its historical volatility, Invesco Actively Managed is 1.96 times less risky than Xtrackers MSCI. It trades about 0.17 of its potential returns per unit of risk. Xtrackers MSCI Emerging is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,627  in Xtrackers MSCI Emerging on December 30, 2024 and sell it today you would earn a total of  179.00  from holding Xtrackers MSCI Emerging or generate 6.81% return on investment over 90 days.

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

Invesco Actively Managed  vs.  Xtrackers MSCI Emerging

Invesco Actively Managed

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Actively Managed are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Invesco Actively may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Xtrackers MSCI Emerging

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers MSCI Emerging are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Xtrackers MSCI may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Invesco Actively and Xtrackers MSCI

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

The idea behind Invesco Actively Managed and Xtrackers MSCI Emerging 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.