Correlation Between Invesco Treasury and HANetf ICAV

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

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

Diversification Opportunities for Invesco Treasury and HANetf ICAV

0.69

Correlation Coefficient

Invesco Treasury  HANetf ICAV

Poor diversification

The 3 months correlation between Invesco and HANetf is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Treasury Bond and HANetf ICAV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANetf ICAV and Invesco Treasury 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 Invesco Treasury Bond are associated (or correlated) with HANetf ICAV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HANetf ICAV has no effect on the direction of Invesco Treasury i.e., Invesco Treasury and HANetf ICAV go up and down completely randomly.

Pair Corralation between Invesco Treasury and HANetf ICAV

Assuming the 90 days trading horizon Invesco Treasury is expected to generate 18.79 times less return on investment than HANetf ICAV. But when comparing it to its historical volatility, Invesco Treasury Bond is 2.32 times less risky than HANetf ICAV. It trades about 0.04 of its potential returns per unit of risk. HANetf ICAV is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  682.00  in HANetf ICAV on September 25, 2024 and sell it today you would earn a total of  175.00  from holding HANetf ICAV or generate 25.66% return on investment over 90 days.

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

Invesco Treasury Bond  vs.  HANetf ICAV

Invesco Treasury Bond

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Treasury Bond are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Invesco Treasury is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

HANetf ICAV

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in HANetf ICAV are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, HANetf ICAV exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Invesco Treasury and HANetf ICAV

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

The idea behind Invesco Treasury Bond and HANetf ICAV 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.