Correlation Between Invesco Gold and Shenkman Short

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

Diversification Opportunities for Invesco Gold and Shenkman Short

0.07

Correlation Coefficient

Invesco Gold  Shenkman Short

Significant diversification

The 3 months correlation between Invesco and Shenkman is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Gold Special and Shenkman Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenkman Short Duration 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 Shenkman Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenkman Short Duration has no effect on the direction of Invesco Gold i.e., Invesco Gold and Shenkman Short go up and down completely randomly.

Pair Corralation between Invesco Gold and Shenkman Short

Assuming the 90 days horizon Invesco Gold Special is expected to under-perform the Shenkman Short. In addition to that, Invesco Gold is 17.67 times more volatile than Shenkman Short Duration. It trades about -0.06 of its total potential returns per unit of risk. Shenkman Short Duration is currently generating about 0.23 per unit of volatility. If you would invest  973.00  in Shenkman Short Duration on October 27, 2024 and sell it today you would earn a total of  14.00  from holding Shenkman Short Duration or generate 1.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Invesco Gold Special  vs.  Shenkman Short Duration

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.

Shenkman Short Duration

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shenkman Short Duration are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Shenkman Short 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 Shenkman Short

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

The idea behind Invesco Gold Special and Shenkman Short Duration 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.