Correlation Between Noah Holdings and Invesco Trust

Can any of the company-specific risk be diversified away by investing in both Noah Holdings and Invesco Trust 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 Trust 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 Trust For, you can compare the effects of market volatilities on Noah Holdings and Invesco Trust 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 Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Noah Holdings and Invesco Trust.

Diversification Opportunities for Noah Holdings and Invesco Trust

0.51

Correlation Coefficient

Noah Holdings  Invesco Trust

Very weak diversification

The 3 months correlation between Noah and Invesco is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Noah Holdings and Invesco Trust For in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Trust For 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 Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Trust For has no effect on the direction of Noah Holdings i.e., Noah Holdings and Invesco Trust go up and down completely randomly.

Pair Corralation between Noah Holdings and Invesco Trust

Given the investment horizon of 90 days Noah Holdings is expected to under-perform the Invesco Trust. In addition to that, Noah Holdings is 3.94 times more volatile than Invesco Trust For. It trades about -0.05 of its total potential returns per unit of risk. Invesco Trust For is currently generating about 0.02 per unit of volatility. If you would invest  1,036  in Invesco Trust For on December 27, 2024 and sell it today you would earn a total of  6.00  from holding Invesco Trust For or generate 0.58% return on investment over 90 days.

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

Noah Holdings  vs.  Invesco Trust For

Noah Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Noah Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Invesco Trust For

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Trust For are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Invesco Trust is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Noah Holdings and Invesco Trust

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

The idea behind Noah Holdings and Invesco Trust For 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.