Correlation Between IShares Trust and Invesco

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

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

Diversification Opportunities for IShares Trust and Invesco

0.0

Correlation Coefficient

IShares Trust  Invesco

Pay attention - limited upside

The 3 months correlation between IShares and Invesco is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Invesco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco and IShares Trust 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 iShares Trust are associated (or correlated) with Invesco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco has no effect on the direction of IShares Trust i.e., IShares Trust and Invesco go up and down completely randomly.

Pair Corralation between IShares Trust and Invesco

If you would invest  2,530  in iShares Trust on November 29, 2024 and sell it today you would earn a total of  6.00  from holding iShares Trust or generate 0.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

iShares Trust   vs.  Invesco

iShares Trust

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Trust are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable primary indicators, IShares Trust is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Invesco

Risk-Adjusted Performance

Very Weak

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

Pair Trading with IShares Trust and Invesco

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

The idea behind iShares Trust and Invesco 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.