Correlation Between Invesco Advantage and Logan Ridge

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

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

Diversification Opportunities for Invesco Advantage and Logan Ridge

0.45

Correlation Coefficient

Invesco Advantage  Logan Ridge

Very weak diversification

The 3 months correlation between Invesco and Logan is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Advantage MIT and Logan Ridge Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logan Ridge Finance and Invesco Advantage 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 Advantage MIT are associated (or correlated) with Logan Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logan Ridge Finance has no effect on the direction of Invesco Advantage i.e., Invesco Advantage and Logan Ridge go up and down completely randomly.

Pair Corralation between Invesco Advantage and Logan Ridge

Considering the 90-day investment horizon Invesco Advantage MIT is expected to generate 0.39 times more return on investment than Logan Ridge. However, Invesco Advantage MIT is 2.59 times less risky than Logan Ridge. It trades about -0.04 of its potential returns per unit of risk. Logan Ridge Finance is currently generating about -0.12 per unit of risk. If you would invest  855.00  in Invesco Advantage MIT on December 28, 2024 and sell it today you would lose (11.00) from holding Invesco Advantage MIT or give up 1.29% of portfolio value over 90 days.

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

Invesco Advantage MIT  vs.  Logan Ridge Finance

Invesco Advantage MIT

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco Advantage MIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, Invesco Advantage is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Logan Ridge Finance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Logan Ridge Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Invesco Advantage and Logan Ridge

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

The idea behind Invesco Advantage MIT and Logan Ridge Finance 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.