Correlation Between Invesco Fundamental and RiverFront Strategic

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

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

Diversification Opportunities for Invesco Fundamental and RiverFront Strategic

0.86

Correlation Coefficient

Invesco Fundamental  RiverFront Strategic

Very poor diversification

The 3 months correlation between Invesco and RiverFront is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Fundamental Investment and RiverFront Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RiverFront Strategic and Invesco Fundamental 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 Fundamental Investment are associated (or correlated) with RiverFront Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RiverFront Strategic has no effect on the direction of Invesco Fundamental i.e., Invesco Fundamental and RiverFront Strategic go up and down completely randomly.

Pair Corralation between Invesco Fundamental and RiverFront Strategic

Given the investment horizon of 90 days Invesco Fundamental Investment is expected to generate 0.62 times more return on investment than RiverFront Strategic. However, Invesco Fundamental Investment is 1.6 times less risky than RiverFront Strategic. It trades about -0.03 of its potential returns per unit of risk. RiverFront Strategic Income is currently generating about -0.02 per unit of risk. If you would invest  2,391  in Invesco Fundamental Investment on September 5, 2024 and sell it today you would lose (10.00) from holding Invesco Fundamental Investment or give up 0.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Invesco Fundamental Investment  vs.  RiverFront Strategic Income

Invesco Fundamental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Fundamental Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Invesco Fundamental is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

RiverFront Strategic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RiverFront Strategic Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, RiverFront Strategic is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Invesco Fundamental and RiverFront Strategic

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

The idea behind Invesco Fundamental Investment and RiverFront Strategic Income 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.