Correlation Between Invesco and Capital Group

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

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

Diversification Opportunities for Invesco and Capital Group

-0.19

Correlation Coefficient

Invesco  Capital Group

Good diversification

The 3 months correlation between Invesco and Capital is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Invesco and Capital Group Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Global and Invesco 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 are associated (or correlated) with Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Global has no effect on the direction of Invesco i.e., Invesco and Capital Group go up and down completely randomly.

Pair Corralation between Invesco and Capital Group

Considering the 90-day investment horizon Invesco is expected to generate 1.46 times more return on investment than Capital Group. However, Invesco is 1.46 times more volatile than Capital Group Global. It trades about 0.22 of its potential returns per unit of risk. Capital Group Global is currently generating about 0.07 per unit of risk. If you would invest  4,902  in Invesco on October 22, 2024 and sell it today you would earn a total of  215.00  from holding Invesco or generate 4.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.09%
Values	Daily Returns

Invesco  vs.  Capital Group Global

Invesco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Invesco is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Capital Group Global

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Invesco and Capital Group

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

The idea behind Invesco and Capital Group Global 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..