Correlation Between Invesco Energy and Baron Real

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

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

Diversification Opportunities for Invesco Energy and Baron Real

0.73

Correlation Coefficient

Invesco Energy  Baron Real

Poor diversification

The 3 months correlation between Invesco and Baron is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Energy Fund and Baron Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Real Estate and Invesco Energy 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 Energy Fund are associated (or correlated) with Baron Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Real Estate has no effect on the direction of Invesco Energy i.e., Invesco Energy and Baron Real go up and down completely randomly.

Pair Corralation between Invesco Energy and Baron Real

Assuming the 90 days horizon Invesco Energy is expected to generate 1.13 times less return on investment than Baron Real. But when comparing it to its historical volatility, Invesco Energy Fund is 1.01 times less risky than Baron Real. It trades about 0.13 of its potential returns per unit of risk. Baron Real Estate is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,709  in Baron Real Estate on May 6, 2025 and sell it today you would earn a total of  348.00  from holding Baron Real Estate or generate 9.38% return on investment over 90 days.

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

Invesco Energy Fund  vs.  Baron Real Estate

Invesco Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Energy Fund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Invesco Energy may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Baron Real Estate

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Baron Real Estate are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Baron Real may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Invesco Energy and Baron Real

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

The idea behind Invesco Energy Fund and Baron Real Estate 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.