Correlation Between First Trust and Invesco BuyBack

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

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

Diversification Opportunities for First Trust and Invesco BuyBack

0.68

Correlation Coefficient

First Trust  Invesco BuyBack

Poor diversification

The 3 months correlation between First and Invesco is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding First Trust NYSE and Invesco BuyBack Achievers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco BuyBack Achievers and First Trust 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 First Trust NYSE are associated (or correlated) with Invesco BuyBack. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco BuyBack Achievers has no effect on the direction of First Trust i.e., First Trust and Invesco BuyBack go up and down completely randomly.

Pair Corralation between First Trust and Invesco BuyBack

Considering the 90-day investment horizon First Trust NYSE is expected to under-perform the Invesco BuyBack. In addition to that, First Trust is 1.18 times more volatile than Invesco BuyBack Achievers. It trades about 0.0 of its total potential returns per unit of risk. Invesco BuyBack Achievers is currently generating about 0.0 per unit of volatility. If you would invest  11,588  in Invesco BuyBack Achievers on December 27, 2024 and sell it today you would lose (33.00) from holding Invesco BuyBack Achievers or give up 0.28% of portfolio value over 90 days.

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

First Trust NYSE  vs.  Invesco BuyBack Achievers

First Trust NYSE

Risk-Adjusted Performance

Very Weak

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

Invesco BuyBack Achievers

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco BuyBack Achievers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward-looking signals, Invesco BuyBack is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with First Trust and Invesco BuyBack

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

The idea behind First Trust NYSE and Invesco BuyBack Achievers 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.