Correlation Between Invesco High and BlackRock MIT

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

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

Diversification Opportunities for Invesco High and BlackRock MIT

0.27

Correlation Coefficient

Invesco High  BlackRock MIT

Modest diversification

The 3 months correlation between Invesco and BlackRock is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Invesco High Income and BlackRock MIT II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock MIT II and Invesco High 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 High Income are associated (or correlated) with BlackRock MIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock MIT II has no effect on the direction of Invesco High i.e., Invesco High and BlackRock MIT go up and down completely randomly.

Pair Corralation between Invesco High and BlackRock MIT

Given the investment horizon of 90 days Invesco High Income is expected to generate 0.56 times more return on investment than BlackRock MIT. However, Invesco High Income is 1.79 times less risky than BlackRock MIT. It trades about 0.1 of its potential returns per unit of risk. BlackRock MIT II is currently generating about -0.19 per unit of risk. If you would invest  743.00  in Invesco High Income on October 1, 2024 and sell it today you would earn a total of  11.00  from holding Invesco High Income or generate 1.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	69.84%
Values	Daily Returns

Invesco High Income  vs.  BlackRock MIT II

Invesco High Income

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Invesco High Income has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Invesco High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BlackRock MIT II

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock MIT II has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Invesco High and BlackRock MIT

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

The idea behind Invesco High Income and BlackRock MIT II 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.