Correlation Between Invesco High and FS Credit

Can any of the company-specific risk be diversified away by investing in both Invesco High and FS Credit 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 FS Credit 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 FS Credit Opportunities, you can compare the effects of market volatilities on Invesco High and FS Credit 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 FS Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco High and FS Credit.

Diversification Opportunities for Invesco High and FS Credit

0.0

Correlation Coefficient

Invesco High  FS Credit

Pay attention - limited upside

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

Pair Corralation between Invesco High and FS Credit

If you would invest  339.00  in FS Credit Opportunities on December 1, 2024 and sell it today you would earn a total of  359.00  from holding FS Credit Opportunities or generate 105.9% return on investment over 90 days.

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

Invesco High Income  vs.  FS Credit Opportunities

Invesco High Income

Risk-Adjusted Performance

Very Weak

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.

FS Credit Opportunities

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FS Credit Opportunities are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, FS Credit may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Invesco High and FS Credit

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

The idea behind Invesco High Income and FS Credit Opportunities 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.