Correlation Between Invesco 1 and CI Canadian

Can any of the company-specific risk be diversified away by investing in both Invesco 1 and CI Canadian 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 1 and CI Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Invesco 1 5 Year and CI Canadian Convertible, you can compare the effects of market volatilities on Invesco 1 and CI Canadian 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 1 with a short position of CI Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco 1 and CI Canadian.

Diversification Opportunities for Invesco 1 and CI Canadian

-0.43

Correlation Coefficient

Invesco 1  CI Canadian

Very good diversification

The 3 months correlation between Invesco and CXF is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Invesco 1 5 Year and CI Canadian Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Canadian Convertible and Invesco 1 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 1 5 Year are associated (or correlated) with CI Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Canadian Convertible has no effect on the direction of Invesco 1 i.e., Invesco 1 and CI Canadian go up and down completely randomly.

Pair Corralation between Invesco 1 and CI Canadian

Assuming the 90 days trading horizon Invesco 1 5 Year is expected to generate 0.2 times more return on investment than CI Canadian. However, Invesco 1 5 Year is 4.94 times less risky than CI Canadian. It trades about 0.14 of its potential returns per unit of risk. CI Canadian Convertible is currently generating about 0.01 per unit of risk. If you would invest  1,771  in Invesco 1 5 Year on December 30, 2024 and sell it today you would earn a total of  30.00  from holding Invesco 1 5 Year or generate 1.69% return on investment over 90 days.

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

Invesco 1 5 Year  vs.  CI Canadian Convertible

Invesco 1 5

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco 1 5 Year are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, Invesco 1 is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

CI Canadian Convertible

Risk-Adjusted Performance

Very Weak

Over the last 90 days CI Canadian Convertible has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, CI Canadian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Invesco 1 and CI Canadian

The main advantage of trading using opposite Invesco 1 and CI Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco 1 position performs unexpectedly, CI Canadian 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 CI Canadian will offset losses from the drop in CI Canadian's long position.

The idea behind Invesco 1 5 Year and CI Canadian Convertible 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.