Correlation Between Falcon Focus and Invesco Energy

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

By analyzing existing cross correlation between Falcon Focus Scv and Invesco Energy Fund, you can compare the effects of market volatilities on Falcon Focus and Invesco Energy 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 Falcon Focus with a short position of Invesco Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Focus and Invesco Energy.

Diversification Opportunities for Falcon Focus and Invesco Energy

0.0

Correlation Coefficient

Falcon Focus  Invesco Energy

Pay attention - limited upside

The 3 months correlation between Falcon and Invesco is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Focus Scv and Invesco Energy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Energy and Falcon Focus 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 Falcon Focus Scv are associated (or correlated) with Invesco Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Energy has no effect on the direction of Falcon Focus i.e., Falcon Focus and Invesco Energy go up and down completely randomly.

Pair Corralation between Falcon Focus and Invesco Energy

If you would invest  2,407  in Invesco Energy Fund on September 15, 2024 and sell it today you would earn a total of  124.00  from holding Invesco Energy Fund or generate 5.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Falcon Focus Scv  vs.  Invesco Energy Fund

Falcon Focus Scv

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Falcon Focus Scv has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Falcon Focus is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Invesco Energy

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Energy Fund are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Invesco Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Falcon Focus and Invesco Energy

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

The idea behind Falcon Focus Scv and Invesco Energy Fund 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.

Check out your portfolio center.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.