Correlation Between Simt Multi and Invesco Global

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

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

Diversification Opportunities for Simt Multi and Invesco Global

0.66

Correlation Coefficient

Simt Multi  Invesco Global

Poor diversification

The 3 months correlation between Simt and Invesco is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Simt Multi Asset Accumulation and Invesco Global Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Global Health and Simt Multi 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 Simt Multi Asset Accumulation are associated (or correlated) with Invesco Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Global Health has no effect on the direction of Simt Multi i.e., Simt Multi and Invesco Global go up and down completely randomly.

Pair Corralation between Simt Multi and Invesco Global

Assuming the 90 days horizon Simt Multi Asset Accumulation is expected to generate 0.49 times more return on investment than Invesco Global. However, Simt Multi Asset Accumulation is 2.02 times less risky than Invesco Global. It trades about 0.25 of its potential returns per unit of risk. Invesco Global Health is currently generating about -0.14 per unit of risk. If you would invest  729.00  in Simt Multi Asset Accumulation on September 15, 2024 and sell it today you would earn a total of  15.00  from holding Simt Multi Asset Accumulation or generate 2.06% return on investment over 90 days.

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

Simt Multi Asset Accumulation  vs.  Invesco Global Health

Simt Multi Asset

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simt Multi Asset Accumulation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Simt Multi is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Invesco Global Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Global Health has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Simt Multi and Invesco Global

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

The idea behind Simt Multi Asset Accumulation and Invesco Global Health 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.