Correlation Between IQ Real and Invesco Active

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

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

Diversification Opportunities for IQ Real and Invesco Active

0.22

Correlation Coefficient

IQ Real  Invesco Active

Modest diversification

The 3 months correlation between ROOF and Invesco is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding IQ Real Estate and Invesco Active Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Active Real and IQ Real 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 IQ Real Estate are associated (or correlated) with Invesco Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Active Real has no effect on the direction of IQ Real i.e., IQ Real and Invesco Active go up and down completely randomly.

Pair Corralation between IQ Real and Invesco Active

Given the investment horizon of 90 days IQ Real Estate is expected to under-perform the Invesco Active. But the etf apears to be less risky and, when comparing its historical volatility, IQ Real Estate is 1.03 times less risky than Invesco Active. The etf trades about -0.05 of its potential returns per unit of risk. The Invesco Active Real is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  9,546  in Invesco Active Real on September 2, 2024 and sell it today you would earn a total of  356.00  from holding Invesco Active Real or generate 3.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.63%
Values	Daily Returns

IQ Real Estate  vs.  Invesco Active Real

IQ Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IQ Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, IQ Real is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Invesco Active Real

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Active Real are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Invesco Active is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with IQ Real and Invesco Active

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

The idea behind IQ Real Estate and Invesco Active Real 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.