Correlation Between Invesco BuyBack and AAM SP

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

By analyzing existing cross correlation between Invesco BuyBack Achievers and AAM SP 500, you can compare the effects of market volatilities on Invesco BuyBack and AAM SP 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 BuyBack with a short position of AAM SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco BuyBack and AAM SP.

Diversification Opportunities for Invesco BuyBack and AAM SP

0.64

Correlation Coefficient

Invesco BuyBack  AAM SP

Poor diversification

The 3 months correlation between Invesco and AAM is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Invesco BuyBack Achievers and AAM SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAM SP 500 and Invesco BuyBack 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 BuyBack Achievers are associated (or correlated) with AAM SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAM SP 500 has no effect on the direction of Invesco BuyBack i.e., Invesco BuyBack and AAM SP go up and down completely randomly.

Pair Corralation between Invesco BuyBack and AAM SP

Considering the 90-day investment horizon Invesco BuyBack Achievers is expected to under-perform the AAM SP. In addition to that, Invesco BuyBack is 1.06 times more volatile than AAM SP 500. It trades about -0.06 of its total potential returns per unit of risk. AAM SP 500 is currently generating about 0.0 per unit of volatility. If you would invest  3,285  in AAM SP 500 on December 17, 2024 and sell it today you would lose (13.00) from holding AAM SP 500 or give up 0.4% of portfolio value over 90 days.

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

Invesco BuyBack Achievers  vs.  AAM SP 500

Invesco BuyBack Achievers

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco BuyBack Achievers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward-looking signals, Invesco BuyBack is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

AAM SP 500

Risk-Adjusted Performance

Very Weak

Over the last 90 days AAM SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, AAM SP is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Invesco BuyBack and AAM SP

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

The idea behind Invesco BuyBack Achievers and AAM SP 500 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.