Correlation Between Invesco Dynamic and EA Series

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

By analyzing existing cross correlation between Invesco Dynamic Oil and EA Series Trust, you can compare the effects of market volatilities on Invesco Dynamic and EA Series 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 Dynamic with a short position of EA Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Dynamic and EA Series.

Diversification Opportunities for Invesco Dynamic and EA Series

0.34

Correlation Coefficient

Invesco Dynamic  EA Series

Weak diversification

The 3 months correlation between Invesco and DRLL is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Dynamic Oil and EA Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EA Series Trust and Invesco Dynamic 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 Dynamic Oil are associated (or correlated) with EA Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EA Series Trust has no effect on the direction of Invesco Dynamic i.e., Invesco Dynamic and EA Series go up and down completely randomly.

Pair Corralation between Invesco Dynamic and EA Series

Considering the 90-day investment horizon Invesco Dynamic Oil is expected to under-perform the EA Series. In addition to that, Invesco Dynamic is 1.22 times more volatile than EA Series Trust. It trades about -0.04 of its total potential returns per unit of risk. EA Series Trust is currently generating about 0.13 per unit of volatility. If you would invest  2,687  in EA Series Trust on December 28, 2024 and sell it today you would earn a total of  285.00  from holding EA Series Trust or generate 10.61% return on investment over 90 days.

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

Invesco Dynamic Oil  vs.  EA Series Trust

Invesco Dynamic Oil

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco Dynamic Oil has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Invesco Dynamic is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

EA Series Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EA Series Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal essential indicators, EA Series may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Invesco Dynamic and EA Series

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

The idea behind Invesco Dynamic Oil and EA Series Trust 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.