Correlation Between Spring Valley and Invesco Dynamic

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

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

Diversification Opportunities for Spring Valley and Invesco Dynamic

-0.31

Correlation Coefficient

Spring Valley  Invesco Dynamic

Very good diversification

The 3 months correlation between Spring and Invesco is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Spring Valley Acquisition and Invesco Dynamic Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Dynamic Food and Spring Valley 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 Spring Valley Acquisition are associated (or correlated) with Invesco Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Dynamic Food has no effect on the direction of Spring Valley i.e., Spring Valley and Invesco Dynamic go up and down completely randomly.

Pair Corralation between Spring Valley and Invesco Dynamic

Given the investment horizon of 90 days Spring Valley is expected to generate 15.31 times less return on investment than Invesco Dynamic. But when comparing it to its historical volatility, Spring Valley Acquisition is 1.33 times less risky than Invesco Dynamic. It trades about 0.01 of its potential returns per unit of risk. Invesco Dynamic Food is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4,782  in Invesco Dynamic Food on September 14, 2024 and sell it today you would earn a total of  115.00  from holding Invesco Dynamic Food or generate 2.4% return on investment over 90 days.

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

Spring Valley Acquisition  vs.  Invesco Dynamic Food

Spring Valley Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spring Valley Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Spring Valley is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Invesco Dynamic Food

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Dynamic Food are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady fundamental drivers, Invesco Dynamic is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Spring Valley and Invesco Dynamic

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

The idea behind Spring Valley Acquisition and Invesco Dynamic Food 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.