Correlation Between Pimco New and Invesco Advantage

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

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

Diversification Opportunities for Pimco New and Invesco Advantage

0.62

Correlation Coefficient

Pimco New  Invesco Advantage

Poor diversification

The 3 months correlation between Pimco and Invesco is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Pimco New York and Invesco Advantage MIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Advantage MIT and Pimco New 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 Pimco New York are associated (or correlated) with Invesco Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Advantage MIT has no effect on the direction of Pimco New i.e., Pimco New and Invesco Advantage go up and down completely randomly.

Pair Corralation between Pimco New and Invesco Advantage

Considering the 90-day investment horizon Pimco New is expected to generate 4.96 times less return on investment than Invesco Advantage. But when comparing it to its historical volatility, Pimco New York is 1.1 times less risky than Invesco Advantage. It trades about 0.01 of its potential returns per unit of risk. Invesco Advantage MIT is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  791.00  in Invesco Advantage MIT on October 9, 2024 and sell it today you would earn a total of  80.00  from holding Invesco Advantage MIT or generate 10.11% return on investment over 90 days.

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

Pimco New York  vs.  Invesco Advantage MIT

Pimco New York

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco New York has generated negative risk-adjusted returns adding no value to fund investors. Despite latest abnormal performance, the Fund's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the mutual fund stockholders.

Invesco Advantage MIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Advantage MIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, Invesco Advantage is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Pimco New and Invesco Advantage

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

The idea behind Pimco New York and Invesco Advantage MIT 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.