Correlation Between Invesco Markets and Amundi Index

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

Diversification Opportunities for Invesco Markets and Amundi Index

0.03

Correlation Coefficient

Invesco Markets  Amundi Index

Significant diversification

The 3 months correlation between Invesco and Amundi is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Markets III and Amundi Index Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi Index Solutions 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 Amundi Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi Index Solutions has no effect on the direction of Invesco Markets i.e., Invesco Markets and Amundi Index go up and down completely randomly.

Pair Corralation between Invesco Markets and Amundi Index

Assuming the 90 days trading horizon Invesco Markets is expected to generate 16.16 times less return on investment than Amundi Index. But when comparing it to its historical volatility, Invesco Markets III is 3.5 times less risky than Amundi Index. It trades about 0.04 of its potential returns per unit of risk. Amundi Index Solutions is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  31,767  in Amundi Index Solutions on October 24, 2024 and sell it today you would earn a total of  1,153  from holding Amundi Index Solutions or generate 3.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Invesco Markets III  vs.  Amundi Index Solutions

Invesco Markets III

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Markets III are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Invesco Markets is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Amundi Index Solutions

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amundi Index Solutions are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Amundi Index may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Invesco Markets and Amundi Index

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

The idea behind Invesco Markets III and Amundi Index Solutions 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.