Correlation Between Invesco Global and Invesco Core

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

By analyzing existing cross correlation between Invesco Global Health and Invesco E Plus, you can compare the effects of market volatilities on Invesco Global and Invesco Core 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 Global with a short position of Invesco Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Global and Invesco Core.

Diversification Opportunities for Invesco Global and Invesco Core

0.4

Correlation Coefficient

Invesco Global  Invesco Core

Very weak diversification

The 3 months correlation between Invesco and Invesco is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Global Health and Invesco E Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco E Plus and Invesco Global 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 Global Health are associated (or correlated) with Invesco Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco E Plus has no effect on the direction of Invesco Global i.e., Invesco Global and Invesco Core go up and down completely randomly.

Pair Corralation between Invesco Global and Invesco Core

Assuming the 90 days horizon Invesco Global Health is expected to generate 3.26 times more return on investment than Invesco Core. However, Invesco Global is 3.26 times more volatile than Invesco E Plus. It trades about 0.06 of its potential returns per unit of risk. Invesco E Plus is currently generating about 0.13 per unit of risk. If you would invest  3,752  in Invesco Global Health on December 27, 2024 and sell it today you would earn a total of  108.00  from holding Invesco Global Health or generate 2.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Invesco Global Health  vs.  Invesco E Plus

Invesco Global Health

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Global Health are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Invesco Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Invesco E Plus

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco E Plus are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Invesco Core 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 Global and Invesco Core

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

The idea behind Invesco Global Health and Invesco E Plus 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.