Correlation Between Invesco Trust and Gabelli Global

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

Diversification Opportunities for Invesco Trust and Gabelli Global

0.85

Correlation Coefficient

Invesco Trust  Gabelli Global

Very poor diversification

The 3 months correlation between Invesco and Gabelli is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Trust For and Gabelli Global Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Global Small 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 Gabelli Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Global Small has no effect on the direction of Invesco Trust i.e., Invesco Trust and Gabelli Global go up and down completely randomly.

Pair Corralation between Invesco Trust and Gabelli Global

Considering the 90-day investment horizon Invesco Trust For is expected to under-perform the Gabelli Global. But the stock apears to be less risky and, when comparing its historical volatility, Invesco Trust For is 1.19 times less risky than Gabelli Global. The stock trades about -0.12 of its potential returns per unit of risk. The Gabelli Global Small is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  1,295  in Gabelli Global Small on December 1, 2024 and sell it today you would lose (54.00) from holding Gabelli Global Small or give up 4.17% of portfolio value over 90 days.

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

Invesco Trust For  vs.  Gabelli Global Small

Invesco Trust For

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco Trust For has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Gabelli Global Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gabelli Global Small has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Gabelli Global is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Invesco Trust and Gabelli Global

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

The idea behind Invesco Trust For and Gabelli Global Small 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.