Correlation Between Invesco Global and Invesco SP

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

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

Diversification Opportunities for Invesco Global and Invesco SP

0.15

Correlation Coefficient

Invesco Global  Invesco SP

Average diversification

The 3 months correlation between Invesco and Invesco is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Global Clean and Invesco SP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP Global and Invesco Global 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 Global Clean are associated (or correlated) with Invesco SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP Global has no effect on the direction of Invesco Global i.e., Invesco Global and Invesco SP go up and down completely randomly.

Pair Corralation between Invesco Global and Invesco SP

Considering the 90-day investment horizon Invesco Global is expected to generate 7.25 times less return on investment than Invesco SP. In addition to that, Invesco Global is 1.59 times more volatile than Invesco SP Global. It trades about 0.02 of its total potential returns per unit of risk. Invesco SP Global is currently generating about 0.18 per unit of volatility. If you would invest  5,487  in Invesco SP Global on February 4, 2024 and sell it today you would earn a total of  199.00  from holding Invesco SP Global or generate 3.63% return on investment over 90 days.

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

Invesco Global Clean  vs.  Invesco SP Global

Invesco Global Clean

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Global Clean are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Invesco Global is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Invesco SP Global

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco SP Global are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Invesco SP may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Invesco Global and Invesco SP

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

The idea behind Invesco Global Clean and Invesco SP Global 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.

Check out your portfolio center.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.