Correlation Between Invesco Short and Technology Ultrasector

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

By analyzing existing cross correlation between Invesco Short Term and Technology Ultrasector Profund, you can compare the effects of market volatilities on Invesco Short and Technology Ultrasector 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 Short with a short position of Technology Ultrasector. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Short and Technology Ultrasector.

Diversification Opportunities for Invesco Short and Technology Ultrasector

0.89

Correlation Coefficient

Invesco Short  Technology Ultrasector

Very poor diversification

The 3 months correlation between Invesco and Technology is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Short Term and Technology Ultrasector Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technology Ultrasector and Invesco Short 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 Short Term are associated (or correlated) with Technology Ultrasector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technology Ultrasector has no effect on the direction of Invesco Short i.e., Invesco Short and Technology Ultrasector go up and down completely randomly.

Pair Corralation between Invesco Short and Technology Ultrasector

Assuming the 90 days horizon Invesco Short is expected to generate 28.17 times less return on investment than Technology Ultrasector. But when comparing it to its historical volatility, Invesco Short Term is 17.85 times less risky than Technology Ultrasector. It trades about 0.17 of its potential returns per unit of risk. Technology Ultrasector Profund is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  3,424  in Technology Ultrasector Profund on May 12, 2025 and sell it today you would earn a total of  855.00  from holding Technology Ultrasector Profund or generate 24.97% return on investment over 90 days.

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

Invesco Short Term  vs.  Technology Ultrasector Profund

Invesco Short Term

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Short Term are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Invesco Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Technology Ultrasector

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Technology Ultrasector Profund are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Technology Ultrasector showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Invesco Short and Technology Ultrasector

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

The idea behind Invesco Short Term and Technology Ultrasector Profund 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.

Check out your portfolio center.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.