Correlation Between MORE and Invesco KBW

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

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

Diversification Opportunities for MORE and Invesco KBW

0.0

Correlation Coefficient

MORE  Invesco KBW

Pay attention - limited upside

The 3 months correlation between MORE and Invesco is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MORE and Invesco KBW Premium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco KBW Premium and MORE 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 MORE are associated (or correlated) with Invesco KBW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco KBW Premium has no effect on the direction of MORE i.e., MORE and Invesco KBW go up and down completely randomly.

Pair Corralation between MORE and Invesco KBW

If you would invest (100.00) in MORE on December 27, 2024 and sell it today you would earn a total of  100.00  from holding MORE or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

MORE  vs.  Invesco KBW Premium

MORE

Risk-Adjusted Performance

Very Weak

Over the last 90 days MORE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, MORE is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Invesco KBW Premium

Risk-Adjusted Performance

Very Weak

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

Pair Trading with MORE and Invesco KBW

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

The idea behind MORE and Invesco KBW Premium 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.