Correlation Between Invesco International and Jennison Natural

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

By analyzing existing cross correlation between Invesco International Companies and Jennison Natural Resources, you can compare the effects of market volatilities on Invesco International and Jennison Natural 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 Jennison Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco International and Jennison Natural.

Diversification Opportunities for Invesco International and Jennison Natural

-0.6

Correlation Coefficient

Invesco International  Jennison Natural

Excellent diversification

The 3 months correlation between Invesco and Jennison is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Invesco International Companie and Jennison Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jennison Natural Res 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 Companies are associated (or correlated) with Jennison Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jennison Natural Res has no effect on the direction of Invesco International i.e., Invesco International and Jennison Natural go up and down completely randomly.

Pair Corralation between Invesco International and Jennison Natural

If you would invest  1,043  in Invesco International Companies on September 22, 2024 and sell it today you would earn a total of  0.00  from holding Invesco International Companies or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

Invesco International Companie  vs.  Jennison Natural Resources

Invesco International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Jennison Natural Res

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jennison Natural Resources has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Invesco International and Jennison Natural

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

The idea behind Invesco International Companies and Jennison Natural Resources 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.