Correlation Between Invesco Global and Simt Tax-managed

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

Diversification Opportunities for Invesco Global and Simt Tax-managed

0.82

Correlation Coefficient

Invesco Global  Simt Tax-managed

Very poor diversification

The 3 months correlation between Invesco and Simt is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Global Health and Simt Tax Managed Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Tax Managed 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 Simt Tax-managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Tax Managed has no effect on the direction of Invesco Global i.e., Invesco Global and Simt Tax-managed go up and down completely randomly.

Pair Corralation between Invesco Global and Simt Tax-managed

Assuming the 90 days horizon Invesco Global is expected to generate 11.39 times less return on investment than Simt Tax-managed. In addition to that, Invesco Global is 1.04 times more volatile than Simt Tax Managed Large. It trades about 0.0 of its total potential returns per unit of risk. Simt Tax Managed Large is currently generating about 0.04 per unit of volatility. If you would invest  3,039  in Simt Tax Managed Large on October 11, 2024 and sell it today you would earn a total of  518.00  from holding Simt Tax Managed Large or generate 17.05% return on investment over 90 days.

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

Invesco Global Health  vs.  Simt Tax Managed Large

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 fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Simt Tax Managed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simt Tax Managed Large 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.

Pair Trading with Invesco Global and Simt Tax-managed

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

The idea behind Invesco Global Health and Simt Tax Managed Large 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.