Correlation Between Invesco Raymond and First Trust

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

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

Diversification Opportunities for Invesco Raymond and First Trust

0.71

Correlation Coefficient

Invesco Raymond  First Trust

Poor diversification

The 3 months correlation between Invesco and First is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Raymond James and First Trust Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Equity and Invesco Raymond 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 Raymond James are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Equity has no effect on the direction of Invesco Raymond i.e., Invesco Raymond and First Trust go up and down completely randomly.

Pair Corralation between Invesco Raymond and First Trust

If you would invest  11,405  in First Trust Equity on September 13, 2024 and sell it today you would earn a total of  1,131  from holding First Trust Equity or generate 9.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	2.33%
Values	Daily Returns

Invesco Raymond James  vs.  First Trust Equity

Invesco Raymond James

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Raymond James has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Invesco Raymond is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

First Trust Equity

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Equity are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, First Trust showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Invesco Raymond and First Trust

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

The idea behind Invesco Raymond James and First Trust Equity 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.