Correlation Between Rmb Mendon and Invesco Growth

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

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

Diversification Opportunities for Rmb Mendon and Invesco Growth

0.62

Correlation Coefficient

Rmb Mendon  Invesco Growth

Poor diversification

The 3 months correlation between Rmb and Invesco is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Rmb Mendon Financial and Invesco Growth Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Growth Allocation and Rmb Mendon 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 Rmb Mendon Financial are associated (or correlated) with Invesco Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Growth Allocation has no effect on the direction of Rmb Mendon i.e., Rmb Mendon and Invesco Growth go up and down completely randomly.

Pair Corralation between Rmb Mendon and Invesco Growth

Assuming the 90 days horizon Rmb Mendon Financial is expected to under-perform the Invesco Growth. In addition to that, Rmb Mendon is 1.03 times more volatile than Invesco Growth Allocation. It trades about -0.32 of its total potential returns per unit of risk. Invesco Growth Allocation is currently generating about -0.27 per unit of volatility. If you would invest  1,648  in Invesco Growth Allocation on October 9, 2024 and sell it today you would lose (117.00) from holding Invesco Growth Allocation or give up 7.1% of portfolio value over 90 days.

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

Rmb Mendon Financial  vs.  Invesco Growth Allocation

Rmb Mendon Financial

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rmb Mendon Financial are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Rmb Mendon may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Invesco Growth Allocation

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Rmb Mendon and Invesco Growth

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

The idea behind Rmb Mendon Financial and Invesco Growth Allocation 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.