Correlation Between Invesco DWA and Invesco

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

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

Diversification Opportunities for Invesco DWA and Invesco

-0.04

Correlation Coefficient

Invesco DWA  Invesco

Good diversification

The 3 months correlation between Invesco and Invesco is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Invesco DWA Consumer and Invesco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco and Invesco DWA 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 DWA Consumer are associated (or correlated) with Invesco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco has no effect on the direction of Invesco DWA i.e., Invesco DWA and Invesco go up and down completely randomly.

Pair Corralation between Invesco DWA and Invesco

Considering the 90-day investment horizon Invesco DWA Consumer is expected to generate 1.5 times more return on investment than Invesco. However, Invesco DWA is 1.5 times more volatile than Invesco. It trades about 0.09 of its potential returns per unit of risk. Invesco is currently generating about 0.01 per unit of risk. If you would invest  6,332  in Invesco DWA Consumer on September 14, 2024 and sell it today you would earn a total of  4,561  from holding Invesco DWA Consumer or generate 72.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	22.63%
Values	Daily Returns

Invesco DWA Consumer  vs.  Invesco

Invesco DWA Consumer

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco DWA Consumer are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting technical and fundamental indicators, Invesco DWA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Invesco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Invesco is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Invesco DWA and Invesco

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

The idea behind Invesco DWA Consumer and Invesco 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.