Correlation Between Invesco Preferred and Virtus InfraCap

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

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

Diversification Opportunities for Invesco Preferred and Virtus InfraCap

0.59

Correlation Coefficient

Invesco Preferred  Virtus InfraCap

Very weak diversification

The 3 months correlation between Invesco and Virtus is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Preferred ETF and Virtus InfraCap Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus InfraCap Preferred and Invesco Preferred 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 Preferred ETF are associated (or correlated) with Virtus InfraCap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus InfraCap Preferred has no effect on the direction of Invesco Preferred i.e., Invesco Preferred and Virtus InfraCap go up and down completely randomly.

Pair Corralation between Invesco Preferred and Virtus InfraCap

Considering the 90-day investment horizon Invesco Preferred is expected to generate 3.66 times less return on investment than Virtus InfraCap. In addition to that, Invesco Preferred is 1.38 times more volatile than Virtus InfraCap Preferred. It trades about 0.04 of its total potential returns per unit of risk. Virtus InfraCap Preferred is currently generating about 0.22 per unit of volatility. If you would invest  2,137  in Virtus InfraCap Preferred on September 2, 2024 and sell it today you would earn a total of  129.00  from holding Virtus InfraCap Preferred or generate 6.04% return on investment over 90 days.

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

Invesco Preferred ETF  vs.  Virtus InfraCap Preferred

Invesco Preferred ETF

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Preferred ETF 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 Preferred is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Virtus InfraCap Preferred

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus InfraCap Preferred are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Virtus InfraCap is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Invesco Preferred and Virtus InfraCap

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

The idea behind Invesco Preferred ETF and Virtus InfraCap Preferred 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.