Correlation Between Invesco Optimum and VanEck CMCI

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

Diversification Opportunities for Invesco Optimum and VanEck CMCI

0.93

Correlation Coefficient

Invesco Optimum  VanEck CMCI

Almost no diversification

The 3 months correlation between Invesco and VanEck is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Optimum Yield and VanEck CMCI Commodity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck CMCI Commodity 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 VanEck CMCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck CMCI Commodity has no effect on the direction of Invesco Optimum i.e., Invesco Optimum and VanEck CMCI go up and down completely randomly.

Pair Corralation between Invesco Optimum and VanEck CMCI

Given the investment horizon of 90 days Invesco Optimum is expected to generate 1.05 times less return on investment than VanEck CMCI. But when comparing it to its historical volatility, Invesco Optimum Yield is 1.41 times less risky than VanEck CMCI. It trades about 0.1 of its potential returns per unit of risk. VanEck CMCI Commodity is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,438  in VanEck CMCI Commodity on December 29, 2024 and sell it today you would earn a total of  102.00  from holding VanEck CMCI Commodity or generate 4.18% return on investment over 90 days.

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

Invesco Optimum Yield  vs.  VanEck CMCI Commodity

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.

VanEck CMCI Commodity

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck CMCI Commodity are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, VanEck CMCI is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Invesco Optimum and VanEck CMCI

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

The idea behind Invesco Optimum Yield and VanEck CMCI Commodity 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.