Correlation Between Futuretech and Invesco Trust

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

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

Diversification Opportunities for Futuretech and Invesco Trust

-0.59

Correlation Coefficient

Futuretech  Invesco Trust

Excellent diversification

The 3 months correlation between Futuretech and Invesco is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Futuretech II Acquisition and Invesco Trust For in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Trust For and Futuretech 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 Futuretech II Acquisition are associated (or correlated) with Invesco Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Trust For has no effect on the direction of Futuretech i.e., Futuretech and Invesco Trust go up and down completely randomly.

Pair Corralation between Futuretech and Invesco Trust

Given the investment horizon of 90 days Futuretech II Acquisition is expected to generate 2.43 times more return on investment than Invesco Trust. However, Futuretech is 2.43 times more volatile than Invesco Trust For. It trades about 0.09 of its potential returns per unit of risk. Invesco Trust For is currently generating about -0.17 per unit of risk. If you would invest  1,121  in Futuretech II Acquisition on October 12, 2024 and sell it today you would earn a total of  104.00  from holding Futuretech II Acquisition or generate 9.28% return on investment over 90 days.

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

Futuretech II Acquisition  vs.  Invesco Trust For

Futuretech II Acquisition

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Futuretech II Acquisition are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward indicators, Futuretech may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Invesco Trust For

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Trust For has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Futuretech and Invesco Trust

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

The idea behind Futuretech II Acquisition and Invesco Trust For 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.