Correlation Between Invesco Preferred and Fidelity Preferred

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

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

Diversification Opportunities for Invesco Preferred and Fidelity Preferred

0.95

Correlation Coefficient

Invesco Preferred  Fidelity Preferred

Almost no diversification

The 3 months correlation between Invesco and Fidelity is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Preferred ETF and Fidelity Preferred Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Preferred and Invesco Preferred 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 Preferred ETF are associated (or correlated) with Fidelity Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Preferred has no effect on the direction of Invesco Preferred i.e., Invesco Preferred and Fidelity Preferred go up and down completely randomly.

Pair Corralation between Invesco Preferred and Fidelity Preferred

Considering the 90-day investment horizon Invesco Preferred ETF is expected to generate 2.21 times more return on investment than Fidelity Preferred. However, Invesco Preferred is 2.21 times more volatile than Fidelity Preferred Securities. It trades about 0.04 of its potential returns per unit of risk. Fidelity Preferred Securities is currently generating about 0.07 per unit of risk. If you would invest  1,180  in Invesco Preferred ETF on September 2, 2024 and sell it today you would earn a total of  18.00  from holding Invesco Preferred ETF or generate 1.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Invesco Preferred ETF  vs.  Fidelity Preferred Securities

Invesco Preferred ETF

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Preferred ETF are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Invesco Preferred is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Preferred

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Preferred Securities are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Fidelity Preferred is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Invesco Preferred and Fidelity Preferred

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

The idea behind Invesco Preferred ETF and Fidelity Preferred Securities 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.