Correlation Between Invesco Advantage and Farmers

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

By analyzing existing cross correlation between Invesco Advantage MIT and Farmers And Merchants, you can compare the effects of market volatilities on Invesco Advantage and Farmers 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 Advantage with a short position of Farmers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Advantage and Farmers.

Diversification Opportunities for Invesco Advantage and Farmers

-0.03

Correlation Coefficient

Invesco Advantage  Farmers

Good diversification

The 3 months correlation between Invesco and Farmers is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Advantage MIT and Farmers And Merchants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers And Merchants and Invesco Advantage 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 Advantage MIT are associated (or correlated) with Farmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers And Merchants has no effect on the direction of Invesco Advantage i.e., Invesco Advantage and Farmers go up and down completely randomly.

Pair Corralation between Invesco Advantage and Farmers

Considering the 90-day investment horizon Invesco Advantage is expected to generate 1.86 times less return on investment than Farmers. But when comparing it to its historical volatility, Invesco Advantage MIT is 1.32 times less risky than Farmers. It trades about 0.19 of its potential returns per unit of risk. Farmers And Merchants is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  545,906  in Farmers And Merchants on September 5, 2024 and sell it today you would earn a total of  26,269  from holding Farmers And Merchants or generate 4.81% return on investment over 90 days.

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

Invesco Advantage MIT  vs.  Farmers And Merchants

Invesco Advantage MIT

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Advantage MIT are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward-looking signals, Invesco Advantage is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Farmers And Merchants

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Farmers And Merchants are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental drivers, Farmers disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Invesco Advantage and Farmers

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

The idea behind Invesco Advantage MIT and Farmers And Merchants 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 Commodity Directory module to find actively traded commodities issued by global exchanges.