Correlation Between Invesco International and Aim Investment

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

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

Diversification Opportunities for Invesco International and Aim Investment

0.38

Correlation Coefficient

Invesco International  Aim Investment

Weak diversification

The 3 months correlation between Invesco and Aim is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Invesco International E and Aim Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aim Investment Securities and Invesco International 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 International E are associated (or correlated) with Aim Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aim Investment Securities has no effect on the direction of Invesco International i.e., Invesco International and Aim Investment go up and down completely randomly.

Pair Corralation between Invesco International and Aim Investment

Assuming the 90 days horizon Invesco International E is expected to generate 3.53 times more return on investment than Aim Investment. However, Invesco International is 3.53 times more volatile than Aim Investment Securities. It trades about 0.08 of its potential returns per unit of risk. Aim Investment Securities is currently generating about 0.07 per unit of risk. If you would invest  1,011  in Invesco International E on September 20, 2024 and sell it today you would earn a total of  112.00  from holding Invesco International E or generate 11.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	15.93%
Values	Daily Returns

Invesco International E  vs.  Aim Investment Securities

Invesco International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco International E has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Invesco International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aim Investment Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aim Investment Securities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Aim Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Invesco International and Aim Investment

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

The idea behind Invesco International E and Aim Investment Securities 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.