Correlation Between Invesco Technology and Vela International

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

By analyzing existing cross correlation between Invesco Technology Fund and Vela International, you can compare the effects of market volatilities on Invesco Technology and Vela International 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 Technology with a short position of Vela International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Technology and Vela International.

Diversification Opportunities for Invesco Technology and Vela International

-0.48

Correlation Coefficient

Invesco Technology  Vela International

Very good diversification

The 3 months correlation between Invesco and Vela is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Technology Fund and Vela International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vela International and Invesco Technology 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 Technology Fund are associated (or correlated) with Vela International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vela International has no effect on the direction of Invesco Technology i.e., Invesco Technology and Vela International go up and down completely randomly.

Pair Corralation between Invesco Technology and Vela International

Assuming the 90 days horizon Invesco Technology Fund is expected to under-perform the Vela International. In addition to that, Invesco Technology is 2.39 times more volatile than Vela International. It trades about -0.11 of its total potential returns per unit of risk. Vela International is currently generating about 0.2 per unit of volatility. If you would invest  1,295  in Vela International on December 19, 2024 and sell it today you would earn a total of  128.00  from holding Vela International or generate 9.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Invesco Technology Fund  vs.  Vela International

Invesco Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco Technology Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Vela International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vela International are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vela International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Invesco Technology and Vela International

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

The idea behind Invesco Technology Fund and Vela International 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.