Correlation Between Invesco Value and Clarkston Founders

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

By analyzing existing cross correlation between Invesco Value Opportunities and Clarkston Founders Fund, you can compare the effects of market volatilities on Invesco Value and Clarkston Founders 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 Value with a short position of Clarkston Founders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Value and Clarkston Founders.

Diversification Opportunities for Invesco Value and Clarkston Founders

0.86

Correlation Coefficient

Invesco Value  Clarkston Founders

Very poor diversification

The 3 months correlation between Invesco and Clarkston is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Value Opportunities and Clarkston Founders Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clarkston Founders and Invesco Value 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 Value Opportunities are associated (or correlated) with Clarkston Founders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clarkston Founders has no effect on the direction of Invesco Value i.e., Invesco Value and Clarkston Founders go up and down completely randomly.

Pair Corralation between Invesco Value and Clarkston Founders

Assuming the 90 days horizon Invesco Value Opportunities is expected to generate 1.88 times more return on investment than Clarkston Founders. However, Invesco Value is 1.88 times more volatile than Clarkston Founders Fund. It trades about 0.26 of its potential returns per unit of risk. Clarkston Founders Fund is currently generating about 0.17 per unit of risk. If you would invest  2,062  in Invesco Value Opportunities on September 2, 2024 and sell it today you would earn a total of  412.00  from holding Invesco Value Opportunities or generate 19.98% return on investment over 90 days.

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

Invesco Value Opportunities  vs.  Clarkston Founders Fund

Invesco Value Opport

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Value Opportunities are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Invesco Value showed solid returns over the last few months and may actually be approaching a breakup point.

Clarkston Founders

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clarkston Founders Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Clarkston Founders may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Invesco Value and Clarkston Founders

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

The idea behind Invesco Value Opportunities and Clarkston Founders Fund 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.