Correlation Between Invesco Dynamic and ProShares Online

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

Diversification Opportunities for Invesco Dynamic and ProShares Online

0.86

Correlation Coefficient

Invesco Dynamic  ProShares Online

Very poor diversification

The 3 months correlation between Invesco and ProShares is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Dynamic Leisure and ProShares Online Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Online Retail 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 ProShares Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Online Retail has no effect on the direction of Invesco Dynamic i.e., Invesco Dynamic and ProShares Online go up and down completely randomly.

Pair Corralation between Invesco Dynamic and ProShares Online

Considering the 90-day investment horizon Invesco Dynamic Leisure is expected to generate 0.74 times more return on investment than ProShares Online. However, Invesco Dynamic Leisure is 1.35 times less risky than ProShares Online. It trades about 0.0 of its potential returns per unit of risk. ProShares Online Retail is currently generating about -0.03 per unit of risk. If you would invest  5,492  in Invesco Dynamic Leisure on December 4, 2024 and sell it today you would lose (27.00) from holding Invesco Dynamic Leisure or give up 0.49% of portfolio value over 90 days.

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

Invesco Dynamic Leisure  vs.  ProShares Online Retail

Invesco Dynamic Leisure

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco Dynamic Leisure has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady technical and fundamental indicators, Invesco Dynamic is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

ProShares Online Retail

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Online Retail has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, ProShares Online is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Invesco Dynamic and ProShares Online

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

The idea behind Invesco Dynamic Leisure and ProShares Online Retail 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.