Correlation Between Invesco High and Magic Empire

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

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

Diversification Opportunities for Invesco High and Magic Empire

0.07

Correlation Coefficient

Invesco High  Magic Empire

Significant diversification

The 3 months correlation between Invesco and Magic is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Invesco High Income and Magic Empire Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magic Empire Global and Invesco High 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 High Income are associated (or correlated) with Magic Empire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magic Empire Global has no effect on the direction of Invesco High i.e., Invesco High and Magic Empire go up and down completely randomly.

Pair Corralation between Invesco High and Magic Empire

Given the investment horizon of 90 days Invesco High is expected to generate 40.64 times less return on investment than Magic Empire. But when comparing it to its historical volatility, Invesco High Income is 19.62 times less risky than Magic Empire. It trades about 0.06 of its potential returns per unit of risk. Magic Empire Global is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  45.00  in Magic Empire Global on July 16, 2024 and sell it today you would earn a total of  7.00  from holding Magic Empire Global or generate 15.56% return on investment over 90 days.

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

Invesco High Income  vs.  Magic Empire Global

Invesco High Income

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco High Income are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Invesco High is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Magic Empire Global

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Magic Empire Global are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain technical and fundamental indicators, Magic Empire may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Pair Trading with Invesco High and Magic Empire

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

The idea behind Invesco High Income and Magic Empire Global 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 Commodity Directory module to find actively traded commodities issued by global exchanges.