Correlation Between Invesco Optimum and IShares Commodity

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

By analyzing existing cross correlation between Invesco Optimum Yield and iShares Commodity Curve, you can compare the effects of market volatilities on Invesco Optimum and IShares Commodity 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 Optimum with a short position of IShares Commodity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Optimum and IShares Commodity.

Diversification Opportunities for Invesco Optimum and IShares Commodity

0.75

Correlation Coefficient

Invesco Optimum  IShares Commodity

Poor diversification

The 3 months correlation between Invesco and IShares is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Optimum Yield and iShares Commodity Curve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Commodity Curve and Invesco Optimum 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 Optimum Yield are associated (or correlated) with IShares Commodity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Commodity Curve has no effect on the direction of Invesco Optimum i.e., Invesco Optimum and IShares Commodity go up and down completely randomly.

Pair Corralation between Invesco Optimum and IShares Commodity

Given the investment horizon of 90 days Invesco Optimum Yield is expected to generate 1.2 times more return on investment than IShares Commodity. However, Invesco Optimum is 1.2 times more volatile than iShares Commodity Curve. It trades about 0.1 of its potential returns per unit of risk. iShares Commodity Curve is currently generating about 0.03 per unit of risk. If you would invest  1,293  in Invesco Optimum Yield on December 29, 2024 and sell it today you would earn a total of  53.00  from holding Invesco Optimum Yield or generate 4.1% return on investment over 90 days.

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

Invesco Optimum Yield  vs.  iShares Commodity Curve

Invesco Optimum Yield

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Optimum Yield are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Invesco Optimum is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

iShares Commodity Curve

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Commodity Curve are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, IShares Commodity is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Invesco Optimum and IShares Commodity

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

The idea behind Invesco Optimum Yield and iShares Commodity Curve 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..