Correlation Between Invesco Emerging and PIMCO

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

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

Diversification Opportunities for Invesco Emerging and PIMCO

0.0

Correlation Coefficient

Invesco Emerging  PIMCO

Pay attention - limited upside

The 3 months correlation between Invesco and PIMCO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Emerging Markets and PIMCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO and Invesco Emerging 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 Emerging Markets are associated (or correlated) with PIMCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO has no effect on the direction of Invesco Emerging i.e., Invesco Emerging and PIMCO go up and down completely randomly.

Pair Corralation between Invesco Emerging and PIMCO

If you would invest (100.00) in PIMCO on September 17, 2024 and sell it today you would earn a total of  100.00  from holding PIMCO or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Invesco Emerging Markets  vs.  PIMCO

Invesco Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

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

PIMCO

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Invesco Emerging and PIMCO

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

The idea behind Invesco Emerging Markets and PIMCO 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.