Correlation Between Invesco California and Virtus AllianzGI

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

By analyzing existing cross correlation between Invesco California Value and Virtus AllianzGI Convertible, you can compare the effects of market volatilities on Invesco California and Virtus AllianzGI 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 California with a short position of Virtus AllianzGI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco California and Virtus AllianzGI.

Diversification Opportunities for Invesco California and Virtus AllianzGI

0.33

Correlation Coefficient

Invesco California  Virtus AllianzGI

Weak diversification

The 3 months correlation between Invesco and Virtus is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Invesco California Value and Virtus AllianzGI Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus AllianzGI Con and Invesco California 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 California Value are associated (or correlated) with Virtus AllianzGI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus AllianzGI Con has no effect on the direction of Invesco California i.e., Invesco California and Virtus AllianzGI go up and down completely randomly.

Pair Corralation between Invesco California and Virtus AllianzGI

Considering the 90-day investment horizon Invesco California Value is expected to under-perform the Virtus AllianzGI. In addition to that, Invesco California is 1.1 times more volatile than Virtus AllianzGI Convertible. It trades about -0.06 of its total potential returns per unit of risk. Virtus AllianzGI Convertible is currently generating about 0.01 per unit of volatility. If you would invest  2,200  in Virtus AllianzGI Convertible on September 4, 2024 and sell it today you would earn a total of  9.00  from holding Virtus AllianzGI Convertible or generate 0.41% return on investment over 90 days.

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

Invesco California Value  vs.  Virtus AllianzGI Convertible

Invesco California Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco California Value has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Invesco California is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Virtus AllianzGI Con

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus AllianzGI Convertible are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Virtus AllianzGI is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Invesco California and Virtus AllianzGI

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

The idea behind Invesco California Value and Virtus AllianzGI Convertible 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.