Correlation Between TD Comfort and Invesco Global

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

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

Diversification Opportunities for TD Comfort and Invesco Global

0.96

Correlation Coefficient

TD Comfort  Invesco Global

Almost no diversification

The 3 months correlation between 0P0001FAU5 and Invesco is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding TD Comfort Aggressive 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 TD Comfort 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 TD Comfort Aggressive 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 TD Comfort i.e., TD Comfort and Invesco Global go up and down completely randomly.

Pair Corralation between TD Comfort and Invesco Global

Assuming the 90 days trading horizon TD Comfort Aggressive is expected to generate 0.72 times more return on investment than Invesco Global. However, TD Comfort Aggressive is 1.39 times less risky than Invesco Global. It trades about 0.14 of its potential returns per unit of risk. Invesco Global Companies is currently generating about 0.09 per unit of risk. If you would invest  1,255  in TD Comfort Aggressive on September 14, 2024 and sell it today you would earn a total of  529.00  from holding TD Comfort Aggressive or generate 42.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.8%
Values	Daily Returns

TD Comfort Aggressive  vs.  Invesco Global Companies

TD Comfort Aggressive

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TD Comfort Aggressive are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, TD Comfort may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 inconsistent basic indicators, Invesco Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with TD Comfort and Invesco Global

The main advantage of trading using opposite TD Comfort and Invesco Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TD Comfort 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 TD Comfort Aggressive 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.