Correlation Between Salon City and Invesco Dividend

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

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

Diversification Opportunities for Salon City and Invesco Dividend

0.0

Correlation Coefficient

Salon City  Invesco Dividend

Pay attention - limited upside

The 3 months correlation between Salon and Invesco is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Salon City and Invesco Dividend Achievers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Dividend Ach and Salon City 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 Salon City are associated (or correlated) with Invesco Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Dividend Ach has no effect on the direction of Salon City i.e., Salon City and Invesco Dividend go up and down completely randomly.

Pair Corralation between Salon City and Invesco Dividend

If you would invest  3,502  in Invesco Dividend Achievers on September 26, 2024 and sell it today you would earn a total of  1,118  from holding Invesco Dividend Achievers or generate 31.92% return on investment over 90 days.

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

Salon City  vs.  Invesco Dividend Achievers

Salon City

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Salon City has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Salon City is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Invesco Dividend Ach

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Dividend Achievers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Invesco Dividend is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Salon City and Invesco Dividend

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

The idea behind Salon City and Invesco Dividend Achievers 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.