Correlation Between Distillate Fundamental and Invesco SP

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

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

Diversification Opportunities for Distillate Fundamental and Invesco SP

0.96

Correlation Coefficient

Distillate Fundamental  Invesco SP

Almost no diversification

The 3 months correlation between Distillate and Invesco is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Distillate Fundamental Stabili and Invesco SP SmallCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP SmallCap and Distillate Fundamental 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 Distillate Fundamental Stability are associated (or correlated) with Invesco SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP SmallCap has no effect on the direction of Distillate Fundamental i.e., Distillate Fundamental and Invesco SP go up and down completely randomly.

Pair Corralation between Distillate Fundamental and Invesco SP

Given the investment horizon of 90 days Distillate Fundamental is expected to generate 1.75 times less return on investment than Invesco SP. But when comparing it to its historical volatility, Distillate Fundamental Stability is 1.44 times less risky than Invesco SP. It trades about 0.07 of its potential returns per unit of risk. Invesco SP SmallCap is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  4,901  in Invesco SP SmallCap on May 3, 2025 and sell it today you would earn a total of  320.00  from holding Invesco SP SmallCap or generate 6.53% return on investment over 90 days.

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

Distillate Fundamental Stabili  vs.  Invesco SP SmallCap

Distillate Fundamental

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Distillate Fundamental Stability are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Distillate Fundamental is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Invesco SP SmallCap

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco SP SmallCap are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very sluggish basic indicators, Invesco SP may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Distillate Fundamental and Invesco SP

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

The idea behind Distillate Fundamental Stability and Invesco SP SmallCap 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.