Correlation Between Invesco Trust and Princeton Capital

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

Diversification Opportunities for Invesco Trust and Princeton Capital

-0.24

Correlation Coefficient

Invesco Trust  Princeton Capital

Very good 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 Trust For and Princeton Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Princeton Capital 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 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 Trust i.e., Invesco Trust and Princeton Capital go up and down completely randomly.

Pair Corralation between Invesco Trust and Princeton Capital

Considering the 90-day investment horizon Invesco Trust For is expected to generate 0.06 times more return on investment than Princeton Capital. However, Invesco Trust For is 16.16 times less risky than Princeton Capital. It trades about 0.01 of its potential returns per unit of risk. Princeton Capital is currently generating about -0.02 per unit of risk. If you would invest  1,141  in Invesco Trust For on September 12, 2024 and sell it today you would earn a total of  3.50  from holding Invesco Trust For or generate 0.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Invesco Trust For  vs.  Princeton Capital

Invesco Trust For

Risk-Adjusted Performance

0 of 100

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.

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 fragile 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 Trust and Princeton Capital

The main advantage of trading using opposite Invesco Trust and Princeton Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Trust 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 Trust For 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.