Correlation Between Invesco Global and Spring Valley

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

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

Diversification Opportunities for Invesco Global and Spring Valley

0.39

Correlation Coefficient

Invesco Global  Spring Valley

Weak diversification

The 3 months correlation between Invesco and Spring is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Global Listed and Spring Valley Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spring Valley Acquisition and Invesco Global 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 Global Listed are associated (or correlated) with Spring Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spring Valley Acquisition has no effect on the direction of Invesco Global i.e., Invesco Global and Spring Valley go up and down completely randomly.

Pair Corralation between Invesco Global and Spring Valley

Considering the 90-day investment horizon Invesco Global Listed is expected to generate 5.68 times more return on investment than Spring Valley. However, Invesco Global is 5.68 times more volatile than Spring Valley Acquisition. It trades about 0.09 of its potential returns per unit of risk. Spring Valley Acquisition is currently generating about 0.1 per unit of risk. If you would invest  4,323  in Invesco Global Listed on December 3, 2024 and sell it today you would earn a total of  2,522  from holding Invesco Global Listed or generate 58.34% return on investment over 90 days.

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

Invesco Global Listed  vs.  Spring Valley Acquisition

Invesco Global Listed

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco Global Listed has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Invesco Global is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Spring Valley Acquisition

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Spring Valley Acquisition are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Spring Valley is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Invesco Global and Spring Valley

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

The idea behind Invesco Global Listed and Spring Valley Acquisition 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.