Correlation Between Invesco Optimum and ETRACS Bloomberg

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

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

Diversification Opportunities for Invesco Optimum and ETRACS Bloomberg

0.93

Correlation Coefficient

Invesco Optimum  ETRACS Bloomberg

Almost no diversification

The 3 months correlation between Invesco and ETRACS is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Optimum Yield and ETRACS Bloomberg Commodity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETRACS Bloomberg Com and Invesco Optimum 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 Optimum Yield are associated (or correlated) with ETRACS Bloomberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETRACS Bloomberg Com has no effect on the direction of Invesco Optimum i.e., Invesco Optimum and ETRACS Bloomberg go up and down completely randomly.

Pair Corralation between Invesco Optimum and ETRACS Bloomberg

Given the investment horizon of 90 days Invesco Optimum Yield is expected to under-perform the ETRACS Bloomberg. But the etf apears to be less risky and, when comparing its historical volatility, Invesco Optimum Yield is 3.67 times less risky than ETRACS Bloomberg. The etf trades about 0.0 of its potential returns per unit of risk. The ETRACS Bloomberg Commodity is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,061  in ETRACS Bloomberg Commodity on February 2, 2024 and sell it today you would earn a total of  69.00  from holding ETRACS Bloomberg Commodity or generate 3.35% return on investment over 90 days.

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

Invesco Optimum Yield  vs.  ETRACS Bloomberg Commodity

Invesco Optimum Yield

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Optimum Yield are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental drivers, Invesco Optimum may actually be approaching a critical reversion point that can send shares even higher in June 2024.

ETRACS Bloomberg Com

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ETRACS Bloomberg Commodity are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental indicators, ETRACS Bloomberg may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Invesco Optimum and ETRACS Bloomberg

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

The idea behind Invesco Optimum Yield and ETRACS Bloomberg Commodity 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.