Correlation Between Invesco Global and Oak Ridge

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

Diversification Opportunities for Invesco Global and Oak Ridge

-0.68

Correlation Coefficient

Invesco Global  Oak Ridge

Excellent diversification

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

Pair Corralation between Invesco Global and Oak Ridge

Assuming the 90 days horizon Invesco Global Health is expected to under-perform the Oak Ridge. But the mutual fund apears to be less risky and, when comparing its historical volatility, Invesco Global Health is 1.57 times less risky than Oak Ridge. The mutual fund trades about -0.17 of its potential returns per unit of risk. The Oak Ridge Small is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  793.00  in Oak Ridge Small on September 13, 2024 and sell it today you would earn a total of  92.00  from holding Oak Ridge Small or generate 11.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Invesco Global Health  vs.  Oak Ridge 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 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.

Oak Ridge Small

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oak Ridge Small are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Oak Ridge may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Invesco Global and Oak Ridge

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

The idea behind Invesco Global Health and Oak Ridge 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.

Check out your portfolio center.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.