Correlation Between Hamilton Enhanced and Invesco Low

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

By analyzing existing cross correlation between Hamilton Enhanced Multi Sector and Invesco Low Volatility, you can compare the effects of market volatilities on Hamilton Enhanced and Invesco Low 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 Hamilton Enhanced with a short position of Invesco Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hamilton Enhanced and Invesco Low.

Diversification Opportunities for Hamilton Enhanced and Invesco Low

0.13

Correlation Coefficient

Hamilton Enhanced  Invesco Low

Average diversification

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

Pair Corralation between Hamilton Enhanced and Invesco Low

Assuming the 90 days trading horizon Hamilton Enhanced Multi Sector is expected to under-perform the Invesco Low. In addition to that, Hamilton Enhanced is 2.75 times more volatile than Invesco Low Volatility. It trades about -0.2 of its total potential returns per unit of risk. Invesco Low Volatility is currently generating about 0.35 per unit of volatility. If you would invest  2,532  in Invesco Low Volatility on December 4, 2024 and sell it today you would earn a total of  53.00  from holding Invesco Low Volatility or generate 2.09% return on investment over 90 days.

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

Hamilton Enhanced Multi Sector  vs.  Invesco Low Volatility

Hamilton Enhanced Multi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hamilton Enhanced Multi Sector has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Hamilton Enhanced is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Invesco Low Volatility

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Low Volatility are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Invesco Low is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Hamilton Enhanced and Invesco Low

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

The idea behind Hamilton Enhanced Multi Sector and Invesco Low Volatility 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.