Correlation Between London Stock and Invesco Physical

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

By analyzing existing cross correlation between London Stock Exchange and Invesco Physical Silver, you can compare the effects of market volatilities on London Stock and Invesco Physical 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 London Stock with a short position of Invesco Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of London Stock and Invesco Physical.

Diversification Opportunities for London Stock and Invesco Physical

-0.5

Correlation Coefficient

London Stock  Invesco Physical

Very good diversification

The 3 months correlation between London and Invesco is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding London Stock Exchange and Invesco Physical Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Physical Silver and London Stock 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 London Stock Exchange are associated (or correlated) with Invesco Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Physical Silver has no effect on the direction of London Stock i.e., London Stock and Invesco Physical go up and down completely randomly.

Pair Corralation between London Stock and Invesco Physical

Assuming the 90 days trading horizon London Stock Exchange is expected to generate 0.5 times more return on investment than Invesco Physical. However, London Stock Exchange is 2.0 times less risky than Invesco Physical. It trades about 0.1 of its potential returns per unit of risk. Invesco Physical Silver is currently generating about 0.05 per unit of risk. If you would invest  749,277  in London Stock Exchange on October 8, 2024 and sell it today you would earn a total of  382,723  from holding London Stock Exchange or generate 51.08% return on investment over 90 days.

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

London Stock Exchange  vs.  Invesco Physical Silver

London Stock Exchange

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in London Stock Exchange are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, London Stock may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Invesco Physical Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Physical Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Invesco Physical 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 London Stock and Invesco Physical

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

The idea behind London Stock Exchange and Invesco Physical Silver 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.