Correlation Between Ballast SmallMid and Invesco DWA

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

By analyzing existing cross correlation between Ballast SmallMid Cap and Invesco DWA Emerging, you can compare the effects of market volatilities on Ballast SmallMid and Invesco DWA 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 Ballast SmallMid with a short position of Invesco DWA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ballast SmallMid and Invesco DWA.

Diversification Opportunities for Ballast SmallMid and Invesco DWA

-0.25

Correlation Coefficient

Ballast SmallMid  Invesco DWA

Very good diversification

The 3 months correlation between Ballast and Invesco is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ballast SmallMid Cap and Invesco DWA Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco DWA Emerging and Ballast SmallMid 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 Ballast SmallMid Cap are associated (or correlated) with Invesco DWA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco DWA Emerging has no effect on the direction of Ballast SmallMid i.e., Ballast SmallMid and Invesco DWA go up and down completely randomly.

Pair Corralation between Ballast SmallMid and Invesco DWA

Given the investment horizon of 90 days Ballast SmallMid Cap is expected to generate 0.96 times more return on investment than Invesco DWA. However, Ballast SmallMid Cap is 1.04 times less risky than Invesco DWA. It trades about 0.24 of its potential returns per unit of risk. Invesco DWA Emerging is currently generating about 0.0 per unit of risk. If you would invest  3,643  in Ballast SmallMid Cap on September 5, 2024 and sell it today you would earn a total of  742.00  from holding Ballast SmallMid Cap or generate 20.37% return on investment over 90 days.

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

Ballast SmallMid Cap  vs.  Invesco DWA Emerging

Ballast SmallMid Cap

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ballast SmallMid Cap are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady primary indicators, Ballast SmallMid unveiled solid returns over the last few months and may actually be approaching a breakup point.

Invesco DWA Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco DWA Emerging has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Invesco DWA is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ballast SmallMid and Invesco DWA

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

The idea behind Ballast SmallMid Cap and Invesco DWA Emerging 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.