Correlation Between Invesco Stock and Invesco American

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

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

Diversification Opportunities for Invesco Stock and Invesco American

0.93

Correlation Coefficient

Invesco Stock  Invesco American

Almost no diversification

The 3 months correlation between Invesco and Invesco is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Stock Fund and Invesco American Franchise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco American Fra and Invesco Stock 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 Stock Fund are associated (or correlated) with Invesco American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco American Fra has no effect on the direction of Invesco Stock i.e., Invesco Stock and Invesco American go up and down completely randomly.

Pair Corralation between Invesco Stock and Invesco American

Assuming the 90 days horizon Invesco Stock is expected to generate 2.15 times less return on investment than Invesco American. But when comparing it to its historical volatility, Invesco Stock Fund is 1.44 times less risky than Invesco American. It trades about 0.15 of its potential returns per unit of risk. Invesco American Franchise is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  2,769  in Invesco American Franchise on September 13, 2024 and sell it today you would earn a total of  400.00  from holding Invesco American Franchise or generate 14.45% return on investment over 90 days.

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

Invesco Stock Fund  vs.  Invesco American Franchise

Invesco Stock

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Stock Fund are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Invesco Stock may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Invesco American Fra

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco American Franchise are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Invesco American showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Invesco Stock and Invesco American

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

The idea behind Invesco Stock Fund and Invesco American Franchise 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.