Correlation Between Invesco Markets and Gold Bullion

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

By analyzing existing cross correlation between Invesco Markets III and Gold Bullion Securities, you can compare the effects of market volatilities on Invesco Markets and Gold Bullion 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 Markets with a short position of Gold Bullion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Markets and Gold Bullion.

Diversification Opportunities for Invesco Markets and Gold Bullion

-0.16

Correlation Coefficient

Invesco Markets  Gold Bullion

Good diversification

The 3 months correlation between Invesco and Gold is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Markets III and Gold Bullion Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Bullion Securities and Invesco Markets 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 Markets III are associated (or correlated) with Gold Bullion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Bullion Securities has no effect on the direction of Invesco Markets i.e., Invesco Markets and Gold Bullion go up and down completely randomly.

Pair Corralation between Invesco Markets and Gold Bullion

Assuming the 90 days trading horizon Invesco Markets III is expected to under-perform the Gold Bullion. But the etf apears to be less risky and, when comparing its historical volatility, Invesco Markets III is 1.18 times less risky than Gold Bullion. The etf trades about -0.08 of its potential returns per unit of risk. The Gold Bullion Securities is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  23,020  in Gold Bullion Securities on September 29, 2024 and sell it today you would earn a total of  60.00  from holding Gold Bullion Securities or generate 0.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Invesco Markets III  vs.  Gold Bullion Securities

Invesco Markets III

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Markets III has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Invesco Markets is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gold Bullion Securities

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Bullion Securities are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gold Bullion may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Invesco Markets and Gold Bullion

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

The idea behind Invesco Markets III and Gold Bullion Securities 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.