Correlation Between Invesco High and Princeton Capital

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

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

Diversification Opportunities for Invesco High and Princeton Capital

-0.45

Correlation Coefficient

Invesco High  Princeton Capital

Very good diversification

The 3 months correlation between Invesco and Princeton is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Invesco High Income and Princeton Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Princeton Capital and Invesco High 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 High Income are associated (or correlated) with Princeton Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Princeton Capital has no effect on the direction of Invesco High i.e., Invesco High and Princeton Capital go up and down completely randomly.

Pair Corralation between Invesco High and Princeton Capital

Given the investment horizon of 90 days Invesco High Income is expected to generate 0.04 times more return on investment than Princeton Capital. However, Invesco High Income is 22.4 times less risky than Princeton Capital. It trades about 0.15 of its potential returns per unit of risk. Princeton Capital is currently generating about -0.02 per unit of risk. If you would invest  729.00  in Invesco High Income on August 30, 2024 and sell it today you would earn a total of  25.00  from holding Invesco High Income or generate 3.43% return on investment over 90 days.

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

Invesco High Income  vs.  Princeton Capital

Invesco High Income

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco High Income are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Invesco High is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Princeton Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Princeton Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Invesco High and Princeton Capital

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

The idea behind Invesco High Income and Princeton Capital 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.