Correlation Between Invesco Income and Mesirow Financial

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

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

Diversification Opportunities for Invesco Income and Mesirow Financial

0.72

Correlation Coefficient

Invesco Income  Mesirow Financial

Poor diversification

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

Pair Corralation between Invesco Income and Mesirow Financial

Assuming the 90 days horizon Invesco Income Allocation is expected to generate 0.21 times more return on investment than Mesirow Financial. However, Invesco Income Allocation is 4.82 times less risky than Mesirow Financial. It trades about 0.06 of its potential returns per unit of risk. Mesirow Financial Small is currently generating about -0.04 per unit of risk. If you would invest  1,053  in Invesco Income Allocation on October 26, 2024 and sell it today you would earn a total of  14.00  from holding Invesco Income Allocation or generate 1.33% return on investment over 90 days.

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

Invesco Income Allocation  vs.  Mesirow Financial Small

Invesco Income Allocation

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Income Allocation are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Invesco Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mesirow Financial Small

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Invesco Income and Mesirow Financial

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

The idea behind Invesco Income Allocation and Mesirow Financial Small 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.