Correlation Between AlphaMark Actively and Invesco DWA

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

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

Diversification Opportunities for AlphaMark Actively and Invesco DWA

-0.28

Correlation Coefficient

AlphaMark Actively  Invesco DWA

Very good diversification

The 3 months correlation between AlphaMark and Invesco is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding AlphaMark Actively Managed and Invesco DWA Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco DWA Emerging and AlphaMark Actively 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 AlphaMark Actively Managed are associated (or correlated) with Invesco DWA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco DWA Emerging has no effect on the direction of AlphaMark Actively i.e., AlphaMark Actively and Invesco DWA go up and down completely randomly.

Pair Corralation between AlphaMark Actively and Invesco DWA

Given the investment horizon of 90 days AlphaMark Actively Managed is expected to generate 1.05 times more return on investment than Invesco DWA. However, AlphaMark Actively is 1.05 times more volatile than Invesco DWA Emerging. It trades about 0.11 of its potential returns per unit of risk. Invesco DWA Emerging is currently generating about 0.02 per unit of risk. If you would invest  3,194  in AlphaMark Actively Managed on September 13, 2024 and sell it today you would earn a total of  281.00  from holding AlphaMark Actively Managed or generate 8.8% return on investment over 90 days.

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

AlphaMark Actively Managed  vs.  Invesco DWA Emerging

AlphaMark Actively

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AlphaMark Actively Managed are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating fundamental indicators, AlphaMark Actively may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Invesco DWA Emerging

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco DWA Emerging are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward indicators, Invesco DWA is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with AlphaMark Actively and Invesco DWA

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

The idea behind AlphaMark Actively Managed and Invesco DWA Emerging 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..