Correlation Between Invesco Financial and IShares MSCI

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

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

Diversification Opportunities for Invesco Financial and IShares MSCI

-0.33

Correlation Coefficient

Invesco Financial  IShares MSCI

Very good diversification

The 3 months correlation between Invesco and IShares is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Financial Preferred and iShares MSCI ACWI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI ACWI and Invesco Financial 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 Financial Preferred are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI ACWI has no effect on the direction of Invesco Financial i.e., Invesco Financial and IShares MSCI go up and down completely randomly.

Pair Corralation between Invesco Financial and IShares MSCI

Considering the 90-day investment horizon Invesco Financial Preferred is expected to generate 0.81 times more return on investment than IShares MSCI. However, Invesco Financial Preferred is 1.23 times less risky than IShares MSCI. It trades about -0.03 of its potential returns per unit of risk. iShares MSCI ACWI is currently generating about -0.12 per unit of risk. If you would invest  1,496  in Invesco Financial Preferred on October 9, 2024 and sell it today you would lose (6.00) from holding Invesco Financial Preferred or give up 0.4% of portfolio value over 90 days.

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

Invesco Financial Preferred  vs.  iShares MSCI ACWI

Invesco Financial

Risk-Adjusted Performance

0 of 100

Very Weak

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

iShares MSCI ACWI

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI ACWI are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, IShares MSCI 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 Financial and IShares MSCI

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

The idea behind Invesco Financial Preferred and iShares MSCI ACWI 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.