Correlation Between Invesco Senior and Nuveen Core

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

By analyzing existing cross correlation between Invesco Senior Income and Nuveen Core Equity, you can compare the effects of market volatilities on Invesco Senior and Nuveen Core 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 Senior with a short position of Nuveen Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Senior and Nuveen Core.

Diversification Opportunities for Invesco Senior and Nuveen Core

0.19

Correlation Coefficient

Invesco Senior  Nuveen Core

Average diversification

The 3 months correlation between Invesco and Nuveen is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Senior Income and Nuveen Core Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Core Equity and Invesco Senior 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 Senior Income are associated (or correlated) with Nuveen Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Core Equity has no effect on the direction of Invesco Senior i.e., Invesco Senior and Nuveen Core go up and down completely randomly.

Pair Corralation between Invesco Senior and Nuveen Core

Considering the 90-day investment horizon Invesco Senior Income is expected to generate 1.99 times more return on investment than Nuveen Core. However, Invesco Senior is 1.99 times more volatile than Nuveen Core Equity. It trades about -0.02 of its potential returns per unit of risk. Nuveen Core Equity is currently generating about -0.11 per unit of risk. If you would invest  382.00  in Invesco Senior Income on December 28, 2024 and sell it today you would lose (14.00) from holding Invesco Senior Income or give up 3.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Invesco Senior Income  vs.  Nuveen Core Equity

Invesco Senior Income

Risk-Adjusted Performance

Very Weak

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

Nuveen Core Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nuveen Core Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest fragile performance, the Fund's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with Invesco Senior and Nuveen Core

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

The idea behind Invesco Senior Income and Nuveen Core Equity 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 Transaction History module to view history of all your transactions and understand their impact on performance.