Correlation Between Financial Investors and Invesco India

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

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

Diversification Opportunities for Financial Investors and Invesco India

0.98

Correlation Coefficient

Financial Investors  Invesco India

Almost no diversification

The 3 months correlation between Financial and Invesco is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Financial Investors Trust and Invesco India ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco India ETF and Financial Investors 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 Financial Investors Trust are associated (or correlated) with Invesco India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco India ETF has no effect on the direction of Financial Investors i.e., Financial Investors and Invesco India go up and down completely randomly.

Pair Corralation between Financial Investors and Invesco India

Assuming the 90 days horizon Financial Investors Trust is expected to under-perform the Invesco India. But the etf apears to be less risky and, when comparing its historical volatility, Financial Investors Trust is 1.02 times less risky than Invesco India. The etf trades about -0.07 of its potential returns per unit of risk. The Invesco India ETF is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  2,576  in Invesco India ETF on December 29, 2024 and sell it today you would lose (83.00) from holding Invesco India ETF or give up 3.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Financial Investors Trust  vs.  Invesco India ETF

Financial Investors Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Financial Investors Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Financial Investors is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Invesco India ETF

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Financial Investors and Invesco India

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

The idea behind Financial Investors Trust and Invesco India ETF 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.