Correlation Between VHAI and Invesco High

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

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

Diversification Opportunities for VHAI and Invesco High

-0.8

Correlation Coefficient

VHAI  Invesco High

Pay attention - limited upside

The 3 months correlation between VHAI and Invesco is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding VHAI and Invesco High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco High Yield and VHAI 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 VHAI are associated (or correlated) with Invesco High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco High Yield has no effect on the direction of VHAI i.e., VHAI and Invesco High go up and down completely randomly.

Pair Corralation between VHAI and Invesco High

Given the investment horizon of 90 days VHAI is expected to under-perform the Invesco High. In addition to that, VHAI is 79.34 times more volatile than Invesco High Yield. It trades about -0.16 of its total potential returns per unit of risk. Invesco High Yield is currently generating about 0.18 per unit of volatility. If you would invest  352.00  in Invesco High Yield on September 2, 2024 and sell it today you would earn a total of  7.00  from holding Invesco High Yield or generate 1.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

VHAI  vs.  Invesco High Yield

VHAI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VHAI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Invesco High Yield

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco High Yield are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Invesco High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with VHAI and Invesco High

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

The idea behind VHAI and Invesco High 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.