Correlation Between Invesco CEF and Invesco Zacks

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

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

Diversification Opportunities for Invesco CEF and Invesco Zacks

0.6

Correlation Coefficient

Invesco CEF  Invesco Zacks

Poor diversification

The 3 months correlation between Invesco and Invesco is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Invesco CEF Income and Invesco Zacks Multi Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Zacks Multi and Invesco CEF 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 Invesco CEF Income are associated (or correlated) with Invesco Zacks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Zacks Multi has no effect on the direction of Invesco CEF i.e., Invesco CEF and Invesco Zacks go up and down completely randomly.

Pair Corralation between Invesco CEF and Invesco Zacks

Given the investment horizon of 90 days Invesco CEF is expected to generate 1.65 times less return on investment than Invesco Zacks. But when comparing it to its historical volatility, Invesco CEF Income is 1.14 times less risky than Invesco Zacks. It trades about 0.23 of its potential returns per unit of risk. Invesco Zacks Multi Asset is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  2,523  in Invesco Zacks Multi Asset on October 26, 2024 and sell it today you would earn a total of  105.00  from holding Invesco Zacks Multi Asset or generate 4.16% return on investment over 90 days.

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

Invesco CEF Income  vs.  Invesco Zacks Multi Asset

Invesco CEF Income

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco CEF Income are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Invesco CEF is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Invesco Zacks Multi

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Invesco CEF and Invesco Zacks

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

The idea behind Invesco CEF Income and Invesco Zacks Multi Asset 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.