Correlation Between Invesco Global and Grandeur Peak

Can any of the company-specific risk be diversified away by investing in both Invesco Global and Grandeur Peak 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 Grandeur Peak 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 Grandeur Peak Emerging, you can compare the effects of market volatilities on Invesco Global and Grandeur Peak 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 Grandeur Peak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Global and Grandeur Peak.

Diversification Opportunities for Invesco Global and Grandeur Peak

0.68

Correlation Coefficient

Invesco Global  Grandeur Peak

Poor diversification

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

Pair Corralation between Invesco Global and Grandeur Peak

Assuming the 90 days horizon Invesco Global Health is expected to under-perform the Grandeur Peak. In addition to that, Invesco Global is 1.25 times more volatile than Grandeur Peak Emerging. It trades about -0.2 of its total potential returns per unit of risk. Grandeur Peak Emerging is currently generating about -0.06 per unit of volatility. If you would invest  1,247  in Grandeur Peak Emerging on September 16, 2024 and sell it today you would lose (32.00) from holding Grandeur Peak Emerging or give up 2.57% of portfolio value over 90 days.

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

Invesco Global Health  vs.  Grandeur Peak Emerging

Invesco Global Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Global Health has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Grandeur Peak Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grandeur Peak Emerging has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Grandeur Peak 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 Grandeur Peak

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

The idea behind Invesco Global Health and Grandeur Peak Emerging 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.