Correlation Between Invesco California and Patria Investments

Can any of the company-specific risk be diversified away by investing in both Invesco California and Patria Investments 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 Patria Investments 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 Patria Investments, you can compare the effects of market volatilities on Invesco California and Patria Investments 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 Patria Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco California and Patria Investments.

Diversification Opportunities for Invesco California and Patria Investments

0.09

Correlation Coefficient

Invesco California  Patria Investments

Significant diversification

The 3 months correlation between Invesco and Patria is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Invesco California Value and Patria Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patria Investments 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 Patria Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patria Investments has no effect on the direction of Invesco California i.e., Invesco California and Patria Investments go up and down completely randomly.

Pair Corralation between Invesco California and Patria Investments

Considering the 90-day investment horizon Invesco California is expected to generate 2.5 times less return on investment than Patria Investments. But when comparing it to its historical volatility, Invesco California Value is 2.51 times less risky than Patria Investments. It trades about 0.03 of its potential returns per unit of risk. Patria Investments is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,134  in Patria Investments on December 28, 2024 and sell it today you would earn a total of  25.00  from holding Patria Investments or generate 2.2% return on investment over 90 days.

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

Invesco California Value  vs.  Patria Investments

Invesco California Value

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco California Value are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental indicators, Invesco California is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Patria Investments

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Patria Investments are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Patria Investments is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Invesco California and Patria Investments

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

The idea behind Invesco California Value and Patria Investments 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..