Correlation Between Invesco Health and One Media

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

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

Diversification Opportunities for Invesco Health and One Media

0.82

Correlation Coefficient

Invesco Health  One Media

Very poor diversification

The 3 months correlation between Invesco and One is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Health Care and One Media iP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Media iP and Invesco Health 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 Health Care are associated (or correlated) with One Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Media iP has no effect on the direction of Invesco Health i.e., Invesco Health and One Media go up and down completely randomly.

Pair Corralation between Invesco Health and One Media

Assuming the 90 days trading horizon Invesco Health Care is expected to under-perform the One Media. But the etf apears to be less risky and, when comparing its historical volatility, Invesco Health Care is 3.25 times less risky than One Media. The etf trades about -0.14 of its potential returns per unit of risk. The One Media iP is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  425.00  in One Media iP on September 3, 2024 and sell it today you would earn a total of  0.00  from holding One Media iP or generate 0.0% return on investment over 90 days.

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

Invesco Health Care  vs.  One Media iP

Invesco Health Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Health Care has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Invesco Health is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

One Media iP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days One Media iP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, One Media is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Invesco Health and One Media

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

The idea behind Invesco Health Care and One Media iP 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.