Correlation Between Noah Holdings and Invesco Advantage

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

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

Diversification Opportunities for Noah Holdings and Invesco Advantage

-0.07

Correlation Coefficient

Noah Holdings  Invesco Advantage

Good diversification

The 3 months correlation between Noah and Invesco is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Noah Holdings and Invesco Advantage MIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Advantage MIT and Noah Holdings 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 Noah Holdings are associated (or correlated) with Invesco Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Advantage MIT has no effect on the direction of Noah Holdings i.e., Noah Holdings and Invesco Advantage go up and down completely randomly.

Pair Corralation between Noah Holdings and Invesco Advantage

Given the investment horizon of 90 days Noah Holdings is expected to generate 5.09 times more return on investment than Invesco Advantage. However, Noah Holdings is 5.09 times more volatile than Invesco Advantage MIT. It trades about 0.09 of its potential returns per unit of risk. Invesco Advantage MIT is currently generating about 0.18 per unit of risk. If you would invest  1,250  in Noah Holdings on September 3, 2024 and sell it today you would earn a total of  62.00  from holding Noah Holdings or generate 4.96% return on investment over 90 days.

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

Noah Holdings  vs.  Invesco Advantage MIT

Noah Holdings

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Noah Holdings are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Noah Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Invesco Advantage MIT

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Advantage MIT are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward-looking signals, Invesco Advantage is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Noah Holdings and Invesco Advantage

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

The idea behind Noah Holdings and Invesco Advantage MIT 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.