Correlation Between Invesco SP and Invesco Zacks

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

By analyzing existing cross correlation between Invesco SP 100 and Invesco Zacks Mid Cap, you can compare the effects of market volatilities on Invesco SP and Invesco Zacks 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 SP with a short position of Invesco Zacks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco SP and Invesco Zacks.

Diversification Opportunities for Invesco SP and Invesco Zacks

0.85

Correlation Coefficient

Invesco SP  Invesco Zacks

Very poor diversification

The 3 months correlation between Invesco and Invesco is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Invesco SP 100 and Invesco Zacks Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Zacks Mid and Invesco SP 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 SP 100 are associated (or correlated) with Invesco Zacks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Zacks Mid has no effect on the direction of Invesco SP i.e., Invesco SP and Invesco Zacks go up and down completely randomly.

Pair Corralation between Invesco SP and Invesco Zacks

Given the investment horizon of 90 days Invesco SP 100 is expected to generate 0.86 times more return on investment than Invesco Zacks. However, Invesco SP 100 is 1.16 times less risky than Invesco Zacks. It trades about 0.09 of its potential returns per unit of risk. Invesco Zacks Mid Cap is currently generating about 0.04 per unit of risk. If you would invest  7,427  in Invesco SP 100 on October 11, 2024 and sell it today you would earn a total of  2,795  from holding Invesco SP 100 or generate 37.63% return on investment over 90 days.

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

Invesco SP 100  vs.  Invesco Zacks Mid Cap

Invesco SP 100

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco SP 100 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Invesco SP is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Invesco Zacks Mid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Zacks Mid Cap has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Invesco Zacks 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 SP and Invesco Zacks

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

The idea behind Invesco SP 100 and Invesco Zacks Mid Cap 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.