Correlation Between Invesco Technology and IShares Global

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

By analyzing existing cross correlation between Invesco Technology SP and iShares Global Timber, you can compare the effects of market volatilities on Invesco Technology and IShares 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 Technology with a short position of IShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Technology and IShares Global.

Diversification Opportunities for Invesco Technology and IShares Global

-0.62

Correlation Coefficient

Invesco Technology  IShares Global

Excellent diversification

The 3 months correlation between Invesco and IShares is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Technology SP and iShares Global Timber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Timber and Invesco Technology 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 Technology SP are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Timber has no effect on the direction of Invesco Technology i.e., Invesco Technology and IShares Global go up and down completely randomly.

Pair Corralation between Invesco Technology and IShares Global

Assuming the 90 days trading horizon Invesco Technology SP is expected to generate 1.19 times more return on investment than IShares Global. However, Invesco Technology is 1.19 times more volatile than iShares Global Timber. It trades about 0.09 of its potential returns per unit of risk. iShares Global Timber is currently generating about -0.22 per unit of risk. If you would invest  65,640  in Invesco Technology SP on September 27, 2024 and sell it today you would earn a total of  4,340  from holding Invesco Technology SP or generate 6.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.65%
Values	Daily Returns

Invesco Technology SP  vs.  iShares Global Timber

Invesco Technology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Technology SP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Invesco Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

iShares Global Timber

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Global Timber has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the fund sophisticated investors.

Pair Trading with Invesco Technology and IShares Global

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

The idea behind Invesco Technology SP and iShares Global Timber 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..