Correlation Between Invesco DWA and SonicShares Global

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

By analyzing existing cross correlation between Invesco DWA Consumer and SonicShares Global Shipping, you can compare the effects of market volatilities on Invesco DWA and SonicShares Global 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 DWA with a short position of SonicShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco DWA and SonicShares Global.

Diversification Opportunities for Invesco DWA and SonicShares Global

-0.72

Correlation Coefficient

Invesco DWA  SonicShares Global

Pay attention - limited upside

The 3 months correlation between Invesco and SonicShares is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Invesco DWA Consumer and SonicShares Global Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SonicShares Global and Invesco DWA 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 DWA Consumer are associated (or correlated) with SonicShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SonicShares Global has no effect on the direction of Invesco DWA i.e., Invesco DWA and SonicShares Global go up and down completely randomly.

Pair Corralation between Invesco DWA and SonicShares Global

Considering the 90-day investment horizon Invesco DWA is expected to generate 1.01 times less return on investment than SonicShares Global. But when comparing it to its historical volatility, Invesco DWA Consumer is 1.75 times less risky than SonicShares Global. It trades about 0.07 of its potential returns per unit of risk. SonicShares Global Shipping is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,401  in SonicShares Global Shipping on September 26, 2024 and sell it today you would earn a total of  581.00  from holding SonicShares Global Shipping or generate 24.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Invesco DWA Consumer  vs.  SonicShares Global Shipping

Invesco DWA Consumer

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco DWA Consumer are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Invesco DWA is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

SonicShares Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SonicShares Global Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with Invesco DWA and SonicShares Global

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

The idea behind Invesco DWA Consumer and SonicShares Global Shipping 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.