Correlation Between Simt Tax-managed and Invesco Global

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

By analyzing existing cross correlation between Simt Tax Managed Large and Invesco Global Health, you can compare the effects of market volatilities on Simt Tax-managed and Invesco Global 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 Simt Tax-managed with a short position of Invesco Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt Tax-managed and Invesco Global.

Diversification Opportunities for Simt Tax-managed and Invesco Global

0.79

Correlation Coefficient

Simt Tax-managed  Invesco Global

Poor diversification

The 3 months correlation between Simt and Invesco is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Simt Tax Managed Large and Invesco Global Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Global Health and Simt Tax-managed 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 Simt Tax Managed Large are associated (or correlated) with Invesco Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Global Health has no effect on the direction of Simt Tax-managed i.e., Simt Tax-managed and Invesco Global go up and down completely randomly.

Pair Corralation between Simt Tax-managed and Invesco Global

Assuming the 90 days horizon Simt Tax Managed Large is expected to under-perform the Invesco Global. But the mutual fund apears to be less risky and, when comparing its historical volatility, Simt Tax Managed Large is 1.06 times less risky than Invesco Global. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Invesco Global Health is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,718  in Invesco Global Health on December 20, 2024 and sell it today you would earn a total of  70.00  from holding Invesco Global Health or generate 4.07% return on investment over 90 days.

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

Simt Tax Managed Large  vs.  Invesco Global Health

Simt Tax Managed

Risk-Adjusted Performance

Very Weak

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

Invesco Global Health

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Global Health are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Invesco Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Simt Tax-managed and Invesco Global

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

The idea behind Simt Tax Managed Large and Invesco Global Health 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.