Correlation Between Invesco International and Elfun Diversified

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

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

Diversification Opportunities for Invesco International and Elfun Diversified

0.22

Correlation Coefficient

Invesco International  Elfun Diversified

Modest diversification

The 3 months correlation between Invesco and Elfun is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Invesco International Growth and Elfun Diversified Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elfun Diversified and Invesco International 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 International Growth are associated (or correlated) with Elfun Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elfun Diversified has no effect on the direction of Invesco International i.e., Invesco International and Elfun Diversified go up and down completely randomly.

Pair Corralation between Invesco International and Elfun Diversified

Assuming the 90 days horizon Invesco International Growth is expected to under-perform the Elfun Diversified. In addition to that, Invesco International is 2.83 times more volatile than Elfun Diversified Fund. It trades about -0.18 of its total potential returns per unit of risk. Elfun Diversified Fund is currently generating about -0.06 per unit of volatility. If you would invest  2,182  in Elfun Diversified Fund on September 24, 2024 and sell it today you would lose (37.00) from holding Elfun Diversified Fund or give up 1.7% of portfolio value over 90 days.

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

Invesco International Growth  vs.  Elfun Diversified Fund

Invesco International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco International Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Elfun Diversified

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elfun Diversified Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Elfun Diversified is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Invesco International and Elfun Diversified

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

The idea behind Invesco International Growth and Elfun Diversified Fund 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.