Correlation Between Kopernik Global and Invesco Real

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

By analyzing existing cross correlation between Kopernik Global All Cap and Invesco Real Estate, you can compare the effects of market volatilities on Kopernik Global and Invesco Real 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 Kopernik Global with a short position of Invesco Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kopernik Global and Invesco Real.

Diversification Opportunities for Kopernik Global and Invesco Real

0.24

Correlation Coefficient

Kopernik Global  Invesco Real

Modest diversification

The 3 months correlation between Kopernik and Invesco is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Kopernik Global All Cap and Invesco Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Real Estate and Kopernik Global 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 Kopernik Global All Cap are associated (or correlated) with Invesco Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Real Estate has no effect on the direction of Kopernik Global i.e., Kopernik Global and Invesco Real go up and down completely randomly.

Pair Corralation between Kopernik Global and Invesco Real

Assuming the 90 days horizon Kopernik Global All Cap is expected to generate 0.81 times more return on investment than Invesco Real. However, Kopernik Global All Cap is 1.23 times less risky than Invesco Real. It trades about -0.04 of its potential returns per unit of risk. Invesco Real Estate is currently generating about -0.12 per unit of risk. If you would invest  1,231  in Kopernik Global All Cap on September 17, 2024 and sell it today you would lose (25.00) from holding Kopernik Global All Cap or give up 2.03% of portfolio value over 90 days.

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

Kopernik Global All Cap  vs.  Invesco Real Estate

Kopernik Global All

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kopernik Global All Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Kopernik Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Invesco Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest unfluctuating 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.

Pair Trading with Kopernik Global and Invesco Real

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

The idea behind Kopernik Global All Cap and Invesco Real Estate 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.