Correlation Between Vanguard Extended and Invesco

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

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

Diversification Opportunities for Vanguard Extended and Invesco

0.67

Correlation Coefficient

Vanguard Extended  Invesco

Poor diversification

The 3 months correlation between Vanguard and Invesco is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Market and Invesco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco and Vanguard Extended 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 Vanguard Extended Market are associated (or correlated) with Invesco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco has no effect on the direction of Vanguard Extended i.e., Vanguard Extended and Invesco go up and down completely randomly.

Pair Corralation between Vanguard Extended and Invesco

If you would invest  15,160  in Vanguard Extended Market on September 28, 2024 and sell it today you would earn a total of  4,302  from holding Vanguard Extended Market or generate 28.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	0.37%
Values	Daily Returns

Vanguard Extended Market  vs.  Invesco

Vanguard Extended Market

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Extended Market are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Vanguard Extended may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Invesco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Invesco is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Vanguard Extended and Invesco

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

The idea behind Vanguard Extended Market and Invesco 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.