Correlation Between Invesco California and IHIT

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

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

Diversification Opportunities for Invesco California and IHIT

0.0

Correlation Coefficient

Invesco California  IHIT

Pay attention - limited upside

The 3 months correlation between Invesco and IHIT is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Invesco California Value and IHIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IHIT and Invesco California 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 California Value are associated (or correlated) with IHIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IHIT has no effect on the direction of Invesco California i.e., Invesco California and IHIT go up and down completely randomly.

Pair Corralation between Invesco California and IHIT

If you would invest  864.00  in Invesco California Value on December 2, 2024 and sell it today you would earn a total of  245.00  from holding Invesco California Value or generate 28.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Invesco California Value  vs.  IHIT

Invesco California Value

Risk-Adjusted Performance

Good

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

IHIT

Risk-Adjusted Performance

Very Weak

Over the last 90 days IHIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, IHIT is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Invesco California and IHIT

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

The idea behind Invesco California Value and IHIT 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.