Correlation Between Huber Capital and Invesco American

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

By analyzing existing cross correlation between Huber Capital Equity and Invesco American Franchise, you can compare the effects of market volatilities on Huber Capital and Invesco American 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 Huber Capital with a short position of Invesco American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huber Capital and Invesco American.

Diversification Opportunities for Huber Capital and Invesco American

0.84

Correlation Coefficient

Huber Capital  Invesco American

Very poor diversification

The 3 months correlation between Huber and Invesco is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Huber Capital Equity and Invesco American Franchise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco American Fra and Huber Capital 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 Huber Capital Equity are associated (or correlated) with Invesco American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco American Fra has no effect on the direction of Huber Capital i.e., Huber Capital and Invesco American go up and down completely randomly.

Pair Corralation between Huber Capital and Invesco American

Assuming the 90 days horizon Huber Capital is expected to generate 5.1 times less return on investment than Invesco American. But when comparing it to its historical volatility, Huber Capital Equity is 1.26 times less risky than Invesco American. It trades about 0.03 of its potential returns per unit of risk. Invesco American Franchise is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,826  in Invesco American Franchise on September 27, 2024 and sell it today you would earn a total of  218.00  from holding Invesco American Franchise or generate 7.71% return on investment over 90 days.

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

Huber Capital Equity  vs.  Invesco American Franchise

Huber Capital Equity

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Huber Capital Equity are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Huber Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Invesco American Fra

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco American Franchise are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Invesco American may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Huber Capital and Invesco American

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

The idea behind Huber Capital Equity and Invesco American Franchise 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.