Correlation Between Invesco Advantage and Princeton Capital

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

Diversification Opportunities for Invesco Advantage and Princeton Capital

0.24

Correlation Coefficient

Invesco Advantage  Princeton Capital

Modest diversification

The 3 months correlation between Invesco and Princeton is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Advantage MIT and Princeton Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Princeton Capital 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 Princeton Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Princeton Capital has no effect on the direction of Invesco Advantage i.e., Invesco Advantage and Princeton Capital go up and down completely randomly.

Pair Corralation between Invesco Advantage and Princeton Capital

Considering the 90-day investment horizon Invesco Advantage is expected to generate 3.21 times less return on investment than Princeton Capital. But when comparing it to its historical volatility, Invesco Advantage MIT is 19.27 times less risky than Princeton Capital. It trades about 0.19 of its potential returns per unit of risk. Princeton Capital is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Princeton Capital on September 5, 2024 and sell it today you would lose (1.00) from holding Princeton Capital or give up 7.69% of portfolio value over 90 days.

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

Invesco Advantage MIT  vs.  Princeton Capital

Invesco Advantage MIT

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Advantage MIT are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward-looking signals, Invesco Advantage is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Princeton Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Princeton Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic 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 Princeton Capital

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

The idea behind Invesco Advantage MIT and Princeton Capital 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.