Correlation Between Patria Investments and Invesco California

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

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

Diversification Opportunities for Patria Investments and Invesco California

-0.19

Correlation Coefficient

Patria Investments  Invesco California

Good diversification

The 3 months correlation between Patria and Invesco is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Patria Investments and Invesco California Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco California Value and Patria Investments 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 Patria Investments are associated (or correlated) with Invesco California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco California Value has no effect on the direction of Patria Investments i.e., Patria Investments and Invesco California go up and down completely randomly.

Pair Corralation between Patria Investments and Invesco California

Considering the 90-day investment horizon Patria Investments is expected to under-perform the Invesco California. In addition to that, Patria Investments is 2.53 times more volatile than Invesco California Value. It trades about -0.07 of its total potential returns per unit of risk. Invesco California Value is currently generating about 0.36 per unit of volatility. If you would invest  994.00  in Invesco California Value on October 7, 2024 and sell it today you would earn a total of  121.00  from holding Invesco California Value or generate 12.17% return on investment over 90 days.

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

Patria Investments  vs.  Invesco California Value

Patria Investments

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Patria Investments are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Patria Investments is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Invesco California Value

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco California Value are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental indicators, Invesco California is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Patria Investments and Invesco California

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

The idea behind Patria Investments and Invesco California Value 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.