Correlation Between Invesco Us and JPMorgan ETFs

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

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

Diversification Opportunities for Invesco Us and JPMorgan ETFs

0.9

Correlation Coefficient

Invesco Us  JPMorgan ETFs

Almost no diversification

The 3 months correlation between Invesco and JPMorgan is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Us Treasury and JPMorgan ETFs ICAV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan ETFs ICAV and Invesco Us 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 Us Treasury are associated (or correlated) with JPMorgan ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan ETFs ICAV has no effect on the direction of Invesco Us i.e., Invesco Us and JPMorgan ETFs go up and down completely randomly.

Pair Corralation between Invesco Us and JPMorgan ETFs

Assuming the 90 days trading horizon Invesco Us Treasury is expected to generate 2.31 times more return on investment than JPMorgan ETFs. However, Invesco Us is 2.31 times more volatile than JPMorgan ETFs ICAV. It trades about 0.12 of its potential returns per unit of risk. JPMorgan ETFs ICAV is currently generating about 0.07 per unit of risk. If you would invest  3,330  in Invesco Us Treasury on September 29, 2024 and sell it today you would earn a total of  99.00  from holding Invesco Us Treasury or generate 2.97% return on investment over 90 days.

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

Invesco Us Treasury  vs.  JPMorgan ETFs ICAV

Invesco Us Treasury

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Us Treasury are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Invesco Us is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

JPMorgan ETFs ICAV

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan ETFs ICAV are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, JPMorgan ETFs is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Invesco Us and JPMorgan ETFs

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

The idea behind Invesco Us Treasury and JPMorgan ETFs ICAV 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.