Correlation Between Invesco DWA and Robo Global

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

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

Diversification Opportunities for Invesco DWA and Robo Global

0.63

Correlation Coefficient

Invesco DWA  Robo Global

Poor diversification

The 3 months correlation between Invesco and Robo is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Invesco DWA Utilities and Robo Global Artificial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Robo Global Artificial and Invesco DWA 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 DWA Utilities are associated (or correlated) with Robo Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Robo Global Artificial has no effect on the direction of Invesco DWA i.e., Invesco DWA and Robo Global go up and down completely randomly.

Pair Corralation between Invesco DWA and Robo Global

Considering the 90-day investment horizon Invesco DWA is expected to generate 9.0 times less return on investment than Robo Global. But when comparing it to its historical volatility, Invesco DWA Utilities is 1.31 times less risky than Robo Global. It trades about 0.03 of its potential returns per unit of risk. Robo Global Artificial is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  4,408  in Robo Global Artificial on September 16, 2024 and sell it today you would earn a total of  687.00  from holding Robo Global Artificial or generate 15.59% return on investment over 90 days.

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

Invesco DWA Utilities  vs.  Robo Global Artificial

Invesco DWA Utilities

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco DWA Utilities are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Invesco DWA is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Robo Global Artificial

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Robo Global Artificial are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Robo Global reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Invesco DWA and Robo Global

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

The idea behind Invesco DWA Utilities and Robo Global Artificial 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.

Check out your portfolio center.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.