Correlation Between Steelpath Select and Invesco Growth

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

By analyzing existing cross correlation between Steelpath Select 40 and Invesco Growth Allocation, you can compare the effects of market volatilities on Steelpath Select and Invesco Growth 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 Steelpath Select with a short position of Invesco Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steelpath Select and Invesco Growth.

Diversification Opportunities for Steelpath Select and Invesco Growth

0.47

Correlation Coefficient

Steelpath Select  Invesco Growth

Very weak diversification

The 3 months correlation between Steelpath and Invesco is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Steelpath Select 40 and Invesco Growth Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Growth Allocation and Steelpath Select 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 Steelpath Select 40 are associated (or correlated) with Invesco Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Growth Allocation has no effect on the direction of Steelpath Select i.e., Steelpath Select and Invesco Growth go up and down completely randomly.

Pair Corralation between Steelpath Select and Invesco Growth

Assuming the 90 days horizon Steelpath Select 40 is expected to generate 1.08 times more return on investment than Invesco Growth. However, Steelpath Select is 1.08 times more volatile than Invesco Growth Allocation. It trades about 0.13 of its potential returns per unit of risk. Invesco Growth Allocation is currently generating about 0.04 per unit of risk. If you would invest  592.00  in Steelpath Select 40 on October 2, 2024 and sell it today you would earn a total of  154.00  from holding Steelpath Select 40 or generate 26.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.56%
Values	Daily Returns

Steelpath Select 40  vs.  Invesco Growth Allocation

Steelpath Select

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Steelpath Select 40 are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Steelpath Select is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Invesco Growth Allocation

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Steelpath Select and Invesco Growth

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

The idea behind Steelpath Select 40 and Invesco Growth Allocation 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.