Correlation Between Invesco Active and Invesco Real

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

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

Diversification Opportunities for Invesco Active and Invesco Real

0.46

Correlation Coefficient

Invesco Active  Invesco Real

Very weak diversification

The 3 months correlation between Invesco and Invesco is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Active Real and Invesco Real Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Real Assets and Invesco Active 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 Active Real are associated (or correlated) with Invesco Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Real Assets has no effect on the direction of Invesco Active i.e., Invesco Active and Invesco Real go up and down completely randomly.

Pair Corralation between Invesco Active and Invesco Real

Considering the 90-day investment horizon Invesco Active Real is expected to under-perform the Invesco Real. In addition to that, Invesco Active is 1.18 times more volatile than Invesco Real Assets. It trades about -0.08 of its total potential returns per unit of risk. Invesco Real Assets is currently generating about 0.0 per unit of volatility. If you would invest  1,624  in Invesco Real Assets on September 14, 2024 and sell it today you would earn a total of  1.00  from holding Invesco Real Assets or generate 0.06% return on investment over 90 days.

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

Invesco Active Real  vs.  Invesco Real Assets

Invesco Active Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Active Real has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Invesco Active is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Invesco Real Assets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Real Assets has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Invesco Real is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Invesco Active and Invesco Real

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

The idea behind Invesco Active Real and Invesco Real Assets 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.