Correlation Between Invesco Fundamental and First Trust

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

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

Diversification Opportunities for Invesco Fundamental and First Trust

0.96

Correlation Coefficient

Invesco Fundamental  First Trust

Almost no diversification

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

Pair Corralation between Invesco Fundamental and First Trust

Considering the 90-day investment horizon Invesco Fundamental is expected to generate 3.94 times less return on investment than First Trust. But when comparing it to its historical volatility, Invesco Fundamental High is 3.32 times less risky than First Trust. It trades about 0.23 of its potential returns per unit of risk. First Trust Dorsey is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  2,357  in First Trust Dorsey on April 24, 2025 and sell it today you would earn a total of  344.00  from holding First Trust Dorsey or generate 14.59% return on investment over 90 days.

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

Invesco Fundamental High  vs.  First Trust Dorsey

Invesco Fundamental High

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Fundamental High are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical indicators, Invesco Fundamental is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Trust Dorsey

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Dorsey are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating essential indicators, First Trust demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Invesco Fundamental and First Trust

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

The idea behind Invesco Fundamental High and First Trust Dorsey 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.