Correlation Between Invesco Fundamental and AdvisorShares

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

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

Diversification Opportunities for Invesco Fundamental and AdvisorShares

-0.42

Correlation Coefficient

Invesco Fundamental  AdvisorShares

Very good diversification

The 3 months correlation between Invesco and AdvisorShares is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Fundamental Investment and AdvisorShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares and Invesco Fundamental 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 Fundamental Investment are associated (or correlated) with AdvisorShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares has no effect on the direction of Invesco Fundamental i.e., Invesco Fundamental and AdvisorShares go up and down completely randomly.

Pair Corralation between Invesco Fundamental and AdvisorShares

If you would invest  4,492  in AdvisorShares on October 24, 2024 and sell it today you would earn a total of  0.00  from holding AdvisorShares or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.69%
Values	Daily Returns

Invesco Fundamental Investment  vs.  AdvisorShares

Invesco Fundamental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Fundamental Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Invesco Fundamental is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

AdvisorShares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AdvisorShares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, AdvisorShares is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Invesco Fundamental and AdvisorShares

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

The idea behind Invesco Fundamental Investment and AdvisorShares 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.