Correlation Between Invesco International and Invesco High

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

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

Diversification Opportunities for Invesco International and Invesco High

0.82

Correlation Coefficient

Invesco International  Invesco High

Very poor diversification

The 3 months correlation between Invesco and Invesco is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Invesco International Dividend and Invesco High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco High Yield and Invesco International 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 International Dividend are associated (or correlated) with Invesco High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco High Yield has no effect on the direction of Invesco International i.e., Invesco International and Invesco High go up and down completely randomly.

Pair Corralation between Invesco International and Invesco High

Considering the 90-day investment horizon Invesco International is expected to generate 2.45 times less return on investment than Invesco High. But when comparing it to its historical volatility, Invesco International Dividend is 1.26 times less risky than Invesco High. It trades about 0.04 of its potential returns per unit of risk. Invesco High Yield is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,911  in Invesco High Yield on December 2, 2024 and sell it today you would earn a total of  294.00  from holding Invesco High Yield or generate 15.38% return on investment over 90 days.

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

Invesco International Dividend  vs.  Invesco High Yield

Invesco International

Risk-Adjusted Performance

Very Weak

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

Invesco High Yield

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco High Yield has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with Invesco International and Invesco High

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

The idea behind Invesco International Dividend and Invesco High Yield 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.