Correlation Between Invesco High and Invesco International

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

By analyzing existing cross correlation between Invesco High Yield and Invesco International Dividend, you can compare the effects of market volatilities on Invesco High and Invesco International 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 High with a short position of Invesco International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco High and Invesco International.

Diversification Opportunities for Invesco High and Invesco International

0.64

Correlation Coefficient

Invesco High  Invesco International

Poor diversification

The 3 months correlation between Invesco and Invesco is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Invesco High Yield and Invesco International Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco International and Invesco High 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 High Yield are associated (or correlated) with Invesco International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco International has no effect on the direction of Invesco High i.e., Invesco High and Invesco International go up and down completely randomly.

Pair Corralation between Invesco High and Invesco International

Considering the 90-day investment horizon Invesco High is expected to generate 2.45 times less return on investment than Invesco International. In addition to that, Invesco High is 1.3 times more volatile than Invesco International Dividend. It trades about 0.05 of its total potential returns per unit of risk. Invesco International Dividend is currently generating about 0.16 per unit of volatility. If you would invest  1,809  in Invesco International Dividend on December 28, 2024 and sell it today you would earn a total of  115.00  from holding Invesco International Dividend or generate 6.36% return on investment over 90 days.

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

Invesco High Yield  vs.  Invesco International Dividend

Invesco High Yield

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco High Yield are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Invesco High is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Invesco International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco International Dividend are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating forward indicators, Invesco International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Invesco High and Invesco International

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

The idea behind Invesco High Yield and Invesco International Dividend 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.