Correlation Between Invesco Plc and State Street

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

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

Diversification Opportunities for Invesco Plc and State Street

0.9

Correlation Coefficient

Invesco Plc  State Street

Almost no diversification

The 3 months correlation between Invesco and State is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Plc and State Street Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Corp and Invesco Plc 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 Plc are associated (or correlated) with State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Corp has no effect on the direction of Invesco Plc i.e., Invesco Plc and State Street go up and down completely randomly.

Pair Corralation between Invesco Plc and State Street

Considering the 90-day investment horizon Invesco Plc is expected to under-perform the State Street. In addition to that, Invesco Plc is 1.38 times more volatile than State Street Corp. It trades about -0.07 of its total potential returns per unit of risk. State Street Corp is currently generating about -0.05 per unit of volatility. If you would invest  9,752  in State Street Corp on December 28, 2024 and sell it today you would lose (574.00) from holding State Street Corp or give up 5.89% of portfolio value over 90 days.

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

Invesco Plc  vs.  State Street Corp

Invesco Plc

Risk-Adjusted Performance

Very Weak

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

State Street Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days State Street Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, State Street is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Invesco Plc and State Street

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

The idea behind Invesco Plc and State Street Corp 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.