Correlation Between Invesco CEF and GraniteShares HIPS

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

Diversification Opportunities for Invesco CEF and GraniteShares HIPS

0.82

Correlation Coefficient

Invesco CEF  GraniteShares HIPS

Very poor diversification

The 3 months correlation between Invesco and GraniteShares is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Invesco CEF Income and GraniteShares HIPS High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares HIPS High 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 GraniteShares HIPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GraniteShares HIPS High has no effect on the direction of Invesco CEF i.e., Invesco CEF and GraniteShares HIPS go up and down completely randomly.

Pair Corralation between Invesco CEF and GraniteShares HIPS

Given the investment horizon of 90 days Invesco CEF is expected to generate 3.5 times less return on investment than GraniteShares HIPS. But when comparing it to its historical volatility, Invesco CEF Income is 1.15 times less risky than GraniteShares HIPS. It trades about 0.02 of its potential returns per unit of risk. GraniteShares HIPS High is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,254  in GraniteShares HIPS High on October 10, 2024 and sell it today you would earn a total of  25.00  from holding GraniteShares HIPS High or generate 1.99% return on investment over 90 days.

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

Invesco CEF Income  vs.  GraniteShares HIPS High

Invesco CEF Income

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco CEF Income are ranked lower than 1 (%) 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.

GraniteShares HIPS High

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares HIPS High are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, GraniteShares HIPS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Invesco CEF and GraniteShares HIPS

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

The idea behind Invesco CEF Income and GraniteShares HIPS High 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 Valuation module to check real value of public entities based on technical and fundamental data.