Correlation Between Invesco Global and Deutsche Global

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

Diversification Opportunities for Invesco Global and Deutsche Global

0.13

Correlation Coefficient

Invesco Global  Deutsche Global

Average diversification

The 3 months correlation between Invesco and Deutsche is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Global Health and Deutsche Global Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Global Small 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 Deutsche Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Global Small has no effect on the direction of Invesco Global i.e., Invesco Global and Deutsche Global go up and down completely randomly.

Pair Corralation between Invesco Global and Deutsche Global

Assuming the 90 days horizon Invesco Global Health is expected to under-perform the Deutsche Global. But the mutual fund apears to be less risky and, when comparing its historical volatility, Invesco Global Health is 1.43 times less risky than Deutsche Global. The mutual fund trades about -0.22 of its potential returns per unit of risk. The Deutsche Global Small is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  3,331  in Deutsche Global Small on September 26, 2024 and sell it today you would lose (94.00) from holding Deutsche Global Small or give up 2.82% of portfolio value over 90 days.

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

Invesco Global Health  vs.  Deutsche Global Small

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 weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Deutsche Global Small

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Invesco Global Health and Deutsche Global Small 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.