Correlation Between Invesco Dynamic and US Global

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

By analyzing existing cross correlation between Invesco Dynamic Leisure and US Global Jets, you can compare the effects of market volatilities on Invesco Dynamic and US Global 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 Dynamic with a short position of US Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Dynamic and US Global.

Diversification Opportunities for Invesco Dynamic and US Global

0.94

Correlation Coefficient

Invesco Dynamic  US Global

Almost no diversification

The 3 months correlation between Invesco and JETS is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Dynamic Leisure and US Global Jets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Global Jets and Invesco Dynamic 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 Dynamic Leisure are associated (or correlated) with US Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Global Jets has no effect on the direction of Invesco Dynamic i.e., Invesco Dynamic and US Global go up and down completely randomly.

Pair Corralation between Invesco Dynamic and US Global

Considering the 90-day investment horizon Invesco Dynamic is expected to generate 1.09 times less return on investment than US Global. But when comparing it to its historical volatility, Invesco Dynamic Leisure is 1.41 times less risky than US Global. It trades about 0.07 of its potential returns per unit of risk. US Global Jets is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,786  in US Global Jets on September 25, 2024 and sell it today you would earn a total of  795.00  from holding US Global Jets or generate 44.51% return on investment over 90 days.

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

Invesco Dynamic Leisure  vs.  US Global Jets

Invesco Dynamic Leisure

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Dynamic Leisure are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Invesco Dynamic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

US Global Jets

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in US Global Jets are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, US Global unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Invesco Dynamic and US Global

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

The idea behind Invesco Dynamic Leisure and US Global Jets 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.