Correlation Between Mid Cap and Invesco Growth

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

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

Diversification Opportunities for Mid Cap and Invesco Growth

0.75

Correlation Coefficient

Mid Cap  Invesco Growth

Poor diversification

The 3 months correlation between Mid and Invesco is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Growth and Invesco Growth And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Growth And and Mid Cap 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 Mid Cap Growth are associated (or correlated) with Invesco Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Growth And has no effect on the direction of Mid Cap i.e., Mid Cap and Invesco Growth go up and down completely randomly.

Pair Corralation between Mid Cap and Invesco Growth

Assuming the 90 days horizon Mid Cap Growth is expected to under-perform the Invesco Growth. In addition to that, Mid Cap is 2.02 times more volatile than Invesco Growth And. It trades about -0.08 of its total potential returns per unit of risk. Invesco Growth And is currently generating about 0.01 per unit of volatility. If you would invest  2,139  in Invesco Growth And on December 20, 2024 and sell it today you would earn a total of  11.00  from holding Invesco Growth And or generate 0.51% return on investment over 90 days.

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

Mid Cap Growth  vs.  Invesco Growth And

Mid Cap Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mid Cap Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Invesco Growth And

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Growth And are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Invesco Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mid Cap and Invesco Growth

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

The idea behind Mid Cap Growth and Invesco Growth And 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.