Correlation Between Listed Funds and Invesco Optimum

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

By analyzing existing cross correlation between Listed Funds Trust and Invesco Optimum Yield, you can compare the effects of market volatilities on Listed Funds and Invesco Optimum 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 Listed Funds with a short position of Invesco Optimum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Listed Funds and Invesco Optimum.

Diversification Opportunities for Listed Funds and Invesco Optimum

0.63

Correlation Coefficient

Listed Funds  Invesco Optimum

Poor diversification

The 3 months correlation between Listed and Invesco is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Listed Funds Trust and Invesco Optimum Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Optimum Yield and Listed Funds 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 Listed Funds Trust are associated (or correlated) with Invesco Optimum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Optimum Yield has no effect on the direction of Listed Funds i.e., Listed Funds and Invesco Optimum go up and down completely randomly.

Pair Corralation between Listed Funds and Invesco Optimum

Given the investment horizon of 90 days Listed Funds Trust is expected to under-perform the Invesco Optimum. But the etf apears to be less risky and, when comparing its historical volatility, Listed Funds Trust is 1.03 times less risky than Invesco Optimum. The etf trades about -0.24 of its potential returns per unit of risk. The Invesco Optimum Yield is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,307  in Invesco Optimum Yield on October 7, 2024 and sell it today you would lose (2.00) from holding Invesco Optimum Yield or give up 0.15% of portfolio value over 90 days.

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

Listed Funds Trust  vs.  Invesco Optimum Yield

Listed Funds Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Listed Funds Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Etf's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

Invesco Optimum Yield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Optimum Yield has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Invesco Optimum is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Listed Funds and Invesco Optimum

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

The idea behind Listed Funds Trust and Invesco Optimum Yield 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.