Correlation Between Invesco Electric and Invesco Optimum

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

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

Diversification Opportunities for Invesco Electric and Invesco Optimum

0.22

Correlation Coefficient

Invesco Electric  Invesco Optimum

Modest diversification

The 3 months correlation between Invesco and Invesco is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Electric Vehicle and Invesco Optimum Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Optimum Yield and Invesco Electric 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 Electric Vehicle are associated (or correlated) with Invesco Optimum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Optimum Yield has no effect on the direction of Invesco Electric i.e., Invesco Electric and Invesco Optimum go up and down completely randomly.

Pair Corralation between Invesco Electric and Invesco Optimum

Given the investment horizon of 90 days Invesco Electric Vehicle is expected to under-perform the Invesco Optimum. In addition to that, Invesco Electric is 1.09 times more volatile than Invesco Optimum Yield. It trades about -0.02 of its total potential returns per unit of risk. Invesco Optimum Yield is currently generating about 0.07 per unit of volatility. If you would invest  1,315  in Invesco Optimum Yield on October 22, 2024 and sell it today you would earn a total of  45.00  from holding Invesco Optimum Yield or generate 3.42% return on investment over 90 days.

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

Invesco Electric Vehicle  vs.  Invesco Optimum Yield

Invesco Electric Vehicle

Risk-Adjusted Performance

0 of 100

Very Weak

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

Invesco Optimum Yield

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Optimum Yield are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Invesco Optimum is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Invesco Electric and Invesco Optimum

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

The idea behind Invesco Electric Vehicle and Invesco Optimum Yield 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.