Correlation Between Invesco Global and Renaissance Global

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

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

Diversification Opportunities for Invesco Global and Renaissance Global

0.89

Correlation Coefficient

Invesco Global  Renaissance Global

Very poor diversification

The 3 months correlation between Invesco and Renaissance is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Global Companies and Renaissance Global Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renaissance 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 Companies are associated (or correlated) with Renaissance Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renaissance Global has no effect on the direction of Invesco Global i.e., Invesco Global and Renaissance Global go up and down completely randomly.

Pair Corralation between Invesco Global and Renaissance Global

Assuming the 90 days trading horizon Invesco Global is expected to generate 1.29 times less return on investment than Renaissance Global. But when comparing it to its historical volatility, Invesco Global Companies is 1.31 times less risky than Renaissance Global. It trades about 0.16 of its potential returns per unit of risk. Renaissance Global Science is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,684  in Renaissance Global Science on September 15, 2024 and sell it today you would earn a total of  245.00  from holding Renaissance Global Science or generate 9.13% return on investment over 90 days.

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

Invesco Global Companies  vs.  Renaissance Global Science

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.

Renaissance Global

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Invesco Global and Renaissance Global

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

The idea behind Invesco Global Companies and Renaissance Global Science 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.