Correlation Between Invesco Agriculture and Invesco Electric

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

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

Diversification Opportunities for Invesco Agriculture and Invesco Electric

-0.16

Correlation Coefficient

Invesco Agriculture  Invesco Electric

Good diversification

The 3 months correlation between Invesco and Invesco is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Agriculture Commodity and Invesco Electric Vehicle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Electric Vehicle and Invesco Agriculture 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 Agriculture Commodity are associated (or correlated) with Invesco Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Electric Vehicle has no effect on the direction of Invesco Agriculture i.e., Invesco Agriculture and Invesco Electric go up and down completely randomly.

Pair Corralation between Invesco Agriculture and Invesco Electric

Given the investment horizon of 90 days Invesco Agriculture Commodity is expected to generate 0.71 times more return on investment than Invesco Electric. However, Invesco Agriculture Commodity is 1.4 times less risky than Invesco Electric. It trades about 0.16 of its potential returns per unit of risk. Invesco Electric Vehicle is currently generating about 0.0 per unit of risk. If you would invest  3,662  in Invesco Agriculture Commodity on September 14, 2024 and sell it today you would earn a total of  302.00  from holding Invesco Agriculture Commodity or generate 8.25% return on investment over 90 days.

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

Invesco Agriculture Commodity  vs.  Invesco Electric Vehicle

Invesco Agriculture

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Agriculture Commodity are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental drivers, Invesco Agriculture may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Invesco Electric Vehicle

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Electric Vehicle has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Invesco Electric is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Invesco Agriculture and Invesco Electric

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

The idea behind Invesco Agriculture Commodity and Invesco Electric Vehicle 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.