Correlation Between Invesco High and Invesco Trust

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

Diversification Opportunities for Invesco High and Invesco Trust

-0.12

Correlation Coefficient

Invesco High  Invesco Trust

Good diversification

The 3 months correlation between Invesco and Invesco is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Invesco High Income and Invesco Trust For in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Trust For 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 Invesco Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Trust For has no effect on the direction of Invesco High i.e., Invesco High and Invesco Trust go up and down completely randomly.

Pair Corralation between Invesco High and Invesco Trust

Given the investment horizon of 90 days Invesco High is expected to generate 1.0 times less return on investment than Invesco Trust. But when comparing it to its historical volatility, Invesco High Income is 1.29 times less risky than Invesco Trust. It trades about 0.13 of its potential returns per unit of risk. Invesco Trust For is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,121  in Invesco Trust For on September 5, 2024 and sell it today you would earn a total of  33.00  from holding Invesco Trust For or generate 2.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Invesco High Income  vs.  Invesco Trust For

Invesco High Income

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco High Income are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. 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.

Invesco Trust For

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Trust For are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Invesco Trust is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Invesco High and Invesco Trust

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

The idea behind Invesco High Income and Invesco Trust For 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.