Correlation Between CI Global and Invesco Global

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

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

Diversification Opportunities for CI Global and Invesco Global

0.55

Correlation Coefficient

CI Global  Invesco Global

Very weak diversification

The 3 months correlation between 0P000070I2 and Invesco is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding CI Global Resource and Invesco Global Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Global Companies and CI 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 CI Global Resource are associated (or correlated) with Invesco Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Global Companies has no effect on the direction of CI Global i.e., CI Global and Invesco Global go up and down completely randomly.

Pair Corralation between CI Global and Invesco Global

Assuming the 90 days trading horizon CI Global is expected to generate 1.2 times less return on investment than Invesco Global. In addition to that, CI Global is 1.63 times more volatile than Invesco Global Companies. It trades about 0.08 of its total potential returns per unit of risk. Invesco Global Companies is currently generating about 0.16 per unit of volatility. If you would invest  7,167  in Invesco Global Companies on September 15, 2024 and sell it today you would earn a total of  513.00  from holding Invesco Global Companies or generate 7.16% return on investment over 90 days.

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

CI Global Resource  vs.  Invesco Global Companies

CI Global Resource

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CI Global Resource are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, CI Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Invesco Global Companies

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Global Companies are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, Invesco Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CI Global and Invesco Global

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

The idea behind CI Global Resource and Invesco Global Companies 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.