Correlation Between Growth Strategy and Invesco Short

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

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

Diversification Opportunities for Growth Strategy and Invesco Short

-0.12

Correlation Coefficient

Growth Strategy  Invesco Short

Good diversification

The 3 months correlation between Growth and Invesco is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Growth Strategy Fund and Invesco Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Short Term and Growth Strategy 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 Growth Strategy Fund are associated (or correlated) with Invesco Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Short Term has no effect on the direction of Growth Strategy i.e., Growth Strategy and Invesco Short go up and down completely randomly.

Pair Corralation between Growth Strategy and Invesco Short

Assuming the 90 days horizon Growth Strategy Fund is expected to under-perform the Invesco Short. In addition to that, Growth Strategy is 6.24 times more volatile than Invesco Short Term. It trades about 0.0 of its total potential returns per unit of risk. Invesco Short Term is currently generating about 0.22 per unit of volatility. If you would invest  798.00  in Invesco Short Term on December 22, 2024 and sell it today you would earn a total of  12.00  from holding Invesco Short Term or generate 1.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Growth Strategy Fund  vs.  Invesco Short Term

Growth Strategy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Growth Strategy Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Growth Strategy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Invesco Short Term

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Short Term are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Invesco Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Growth Strategy and Invesco Short

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

The idea behind Growth Strategy Fund and Invesco Short Term 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.