Correlation Between Embrace Change and Invesco International

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

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

Diversification Opportunities for Embrace Change and Invesco International

0.92

Correlation Coefficient

Embrace Change  Invesco International

Almost no diversification

The 3 months correlation between Embrace and Invesco is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Embrace Change Acquisition and Invesco International BuyBack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco International and Embrace Change 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 Embrace Change Acquisition are associated (or correlated) with Invesco International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco International has no effect on the direction of Embrace Change i.e., Embrace Change and Invesco International go up and down completely randomly.

Pair Corralation between Embrace Change and Invesco International

Given the investment horizon of 90 days Embrace Change is expected to generate 9.68 times less return on investment than Invesco International. But when comparing it to its historical volatility, Embrace Change Acquisition is 2.85 times less risky than Invesco International. It trades about 0.08 of its potential returns per unit of risk. Invesco International BuyBack is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  3,939  in Invesco International BuyBack on December 22, 2024 and sell it today you would earn a total of  708.00  from holding Invesco International BuyBack or generate 17.97% return on investment over 90 days.

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

Embrace Change Acquisition  vs.  Invesco International BuyBack

Embrace Change Acqui

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Embrace Change Acquisition are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Embrace Change is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Invesco International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco International BuyBack are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal forward-looking signals, Invesco International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Embrace Change and Invesco International

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

The idea behind Embrace Change Acquisition and Invesco International BuyBack 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.