Correlation Between Invesco Advantage and Powerof Canada

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

Diversification Opportunities for Invesco Advantage and Powerof Canada

0.29

Correlation Coefficient

Invesco Advantage  Powerof Canada

Modest diversification

The 3 months correlation between Invesco and Powerof is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Advantage MIT and Power of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powerof Canada 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 Powerof Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powerof Canada has no effect on the direction of Invesco Advantage i.e., Invesco Advantage and Powerof Canada go up and down completely randomly.

Pair Corralation between Invesco Advantage and Powerof Canada

Considering the 90-day investment horizon Invesco Advantage MIT is expected to under-perform the Powerof Canada. But the stock apears to be less risky and, when comparing its historical volatility, Invesco Advantage MIT is 2.53 times less risky than Powerof Canada. The stock trades about -0.04 of its potential returns per unit of risk. The Power of is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  3,153  in Power of on December 29, 2024 and sell it today you would earn a total of  418.00  from holding Power of or generate 13.26% return on investment over 90 days.

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

Invesco Advantage MIT  vs.  Power of

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.

Powerof Canada

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Power of are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Powerof Canada reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Invesco Advantage and Powerof Canada

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

The idea behind Invesco Advantage MIT and Power of 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.