Correlation Between Tetragon Financial and Invesco Physical

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

By analyzing existing cross correlation between Tetragon Financial Group and Invesco Physical Gold, you can compare the effects of market volatilities on Tetragon Financial and Invesco Physical 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 Tetragon Financial with a short position of Invesco Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tetragon Financial and Invesco Physical.

Diversification Opportunities for Tetragon Financial and Invesco Physical

0.68

Correlation Coefficient

Tetragon Financial  Invesco Physical

Poor diversification

The 3 months correlation between Tetragon and Invesco is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Tetragon Financial Group and Invesco Physical Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Physical Gold and Tetragon Financial 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 Tetragon Financial Group are associated (or correlated) with Invesco Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Physical Gold has no effect on the direction of Tetragon Financial i.e., Tetragon Financial and Invesco Physical go up and down completely randomly.

Pair Corralation between Tetragon Financial and Invesco Physical

Assuming the 90 days trading horizon Tetragon Financial Group is expected to generate 2.3 times more return on investment than Invesco Physical. However, Tetragon Financial is 2.3 times more volatile than Invesco Physical Gold. It trades about 0.08 of its potential returns per unit of risk. Invesco Physical Gold is currently generating about 0.16 per unit of risk. If you would invest  1,425  in Tetragon Financial Group on December 3, 2024 and sell it today you would earn a total of  120.00  from holding Tetragon Financial Group or generate 8.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Tetragon Financial Group  vs.  Invesco Physical Gold

Tetragon Financial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tetragon Financial Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Tetragon Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Invesco Physical Gold

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Physical Gold are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Invesco Physical may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Tetragon Financial and Invesco Physical

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

The idea behind Tetragon Financial Group and Invesco Physical Gold 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.