Correlation Between Invesco Variable and Listed Funds

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

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

Diversification Opportunities for Invesco Variable and Listed Funds

0.45

Correlation Coefficient

Invesco Variable  Listed Funds

Very weak diversification

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

Pair Corralation between Invesco Variable and Listed Funds

Considering the 90-day investment horizon Invesco Variable Rate is expected to generate 0.36 times more return on investment than Listed Funds. However, Invesco Variable Rate is 2.78 times less risky than Listed Funds. It trades about 0.08 of its potential returns per unit of risk. Listed Funds Trust is currently generating about -0.02 per unit of risk. If you would invest  2,396  in Invesco Variable Rate on December 28, 2024 and sell it today you would earn a total of  30.00  from holding Invesco Variable Rate or generate 1.25% return on investment over 90 days.

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

Invesco Variable Rate  vs.  Listed Funds Trust

Invesco Variable Rate

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Variable Rate are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Invesco Variable is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Listed Funds Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Listed Funds Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Listed Funds is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Invesco Variable and Listed Funds

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

The idea behind Invesco Variable Rate and Listed Funds Trust 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.