Correlation Between Invesco Gold and Performance Trust

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

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

Diversification Opportunities for Invesco Gold and Performance Trust

-0.18

Correlation Coefficient

Invesco Gold  Performance Trust

Good diversification

The 3 months correlation between Invesco and Performance is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Gold Special and Performance Trust Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Trust Credit and Invesco Gold 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 Gold Special are associated (or correlated) with Performance Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Trust Credit has no effect on the direction of Invesco Gold i.e., Invesco Gold and Performance Trust go up and down completely randomly.

Pair Corralation between Invesco Gold and Performance Trust

Assuming the 90 days horizon Invesco Gold Special is expected to under-perform the Performance Trust. In addition to that, Invesco Gold is 10.86 times more volatile than Performance Trust Credit. It trades about -0.21 of its total potential returns per unit of risk. Performance Trust Credit is currently generating about -0.32 per unit of volatility. If you would invest  900.00  in Performance Trust Credit on October 12, 2024 and sell it today you would lose (10.00) from holding Performance Trust Credit or give up 1.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Invesco Gold Special  vs.  Performance Trust Credit

Invesco Gold Special

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Gold Special has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Performance Trust Credit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Performance Trust Credit has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Performance Trust 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 Gold and Performance Trust

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

The idea behind Invesco Gold Special and Performance Trust Credit 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.