Correlation Between Invesco 1 and Invesco NASDAQ

Can any of the company-specific risk be diversified away by investing in both Invesco 1 and Invesco NASDAQ 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 Invesco NASDAQ 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 Invesco NASDAQ 100, you can compare the effects of market volatilities on Invesco 1 and Invesco NASDAQ 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 Invesco NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco 1 and Invesco NASDAQ.

Diversification Opportunities for Invesco 1 and Invesco NASDAQ

0.74

Correlation Coefficient

Invesco 1  Invesco NASDAQ

Poor diversification

The 3 months correlation between Invesco and Invesco is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Invesco 1 5 Year and Invesco NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco NASDAQ 100 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 Invesco NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco NASDAQ 100 has no effect on the direction of Invesco 1 i.e., Invesco 1 and Invesco NASDAQ go up and down completely randomly.

Pair Corralation between Invesco 1 and Invesco NASDAQ

Assuming the 90 days trading horizon Invesco 1 5 Year is expected to generate 0.13 times more return on investment than Invesco NASDAQ. However, Invesco 1 5 Year is 7.76 times less risky than Invesco NASDAQ. It trades about -0.04 of its potential returns per unit of risk. Invesco NASDAQ 100 is currently generating about -0.26 per unit of risk. If you would invest  1,788  in Invesco 1 5 Year on October 7, 2024 and sell it today you would lose (2.00) from holding Invesco 1 5 Year or give up 0.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Invesco 1 5 Year  vs.  Invesco NASDAQ 100

Invesco 1 5

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco 1 5 Year are ranked lower than 14 (%) 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.

Invesco NASDAQ 100

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco NASDAQ 100 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Invesco NASDAQ 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 Invesco NASDAQ

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

The idea behind Invesco 1 5 Year and Invesco NASDAQ 100 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.