Correlation Between Invesco Trust and Coastal Carolina

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

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

Diversification Opportunities for Invesco Trust and Coastal Carolina

0.2

Correlation Coefficient

Invesco Trust  Coastal Carolina

Modest diversification

The 3 months correlation between Invesco and Coastal is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Trust For and Coastal Carolina Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coastal Carolina Ban and Invesco Trust 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 Trust For are associated (or correlated) with Coastal Carolina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coastal Carolina Ban has no effect on the direction of Invesco Trust i.e., Invesco Trust and Coastal Carolina go up and down completely randomly.

Pair Corralation between Invesco Trust and Coastal Carolina

Considering the 90-day investment horizon Invesco Trust is expected to generate 5.16 times less return on investment than Coastal Carolina. But when comparing it to its historical volatility, Invesco Trust For is 2.1 times less risky than Coastal Carolina. It trades about 0.09 of its potential returns per unit of risk. Coastal Carolina Bancshares is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  986.00  in Coastal Carolina Bancshares on September 3, 2024 and sell it today you would earn a total of  139.00  from holding Coastal Carolina Bancshares or generate 14.1% return on investment over 90 days.

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

Invesco Trust For  vs.  Coastal Carolina Bancshares

Invesco Trust For

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Trust For are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Invesco Trust is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Coastal Carolina Ban

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Coastal Carolina Bancshares are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Coastal Carolina sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Invesco Trust and Coastal Carolina

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

The idea behind Invesco Trust For and Coastal Carolina Bancshares 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.