Correlation Between AIM ETF and Invesco Total

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

By analyzing existing cross correlation between AIM ETF Products and Invesco Total Return, you can compare the effects of market volatilities on AIM ETF and Invesco Total 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 AIM ETF with a short position of Invesco Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIM ETF and Invesco Total.

Diversification Opportunities for AIM ETF and Invesco Total

-0.65

Correlation Coefficient

AIM ETF  Invesco Total

Excellent diversification

The 3 months correlation between AIM and Invesco is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding AIM ETF Products and Invesco Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Total Return and AIM ETF 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 AIM ETF Products are associated (or correlated) with Invesco Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Total Return has no effect on the direction of AIM ETF i.e., AIM ETF and Invesco Total go up and down completely randomly.

Pair Corralation between AIM ETF and Invesco Total

Given the investment horizon of 90 days AIM ETF Products is expected to under-perform the Invesco Total. In addition to that, AIM ETF is 51.15 times more volatile than Invesco Total Return. It trades about -0.15 of its total potential returns per unit of risk. Invesco Total Return is currently generating about -0.02 per unit of volatility. If you would invest  4,727  in Invesco Total Return on September 13, 2024 and sell it today you would lose (12.00) from holding Invesco Total Return or give up 0.25% of portfolio value over 90 days.

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

AIM ETF Products  vs.  Invesco Total Return

AIM ETF Products

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days AIM ETF Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Etf's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Invesco Total Return

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with AIM ETF and Invesco Total

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

The idea behind AIM ETF Products and Invesco Total Return 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.