Correlation Between Invesco Solar and COSCO SHIPPING

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Can any of the company-specific risk be diversified away by investing in both Invesco Solar and COSCO SHIPPING 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 Solar and COSCO SHIPPING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Solar ETF and COSCO SHIPPING HOLDINGS, you can compare the effects of market volatilities on Invesco Solar and COSCO SHIPPING 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 Solar with a short position of COSCO SHIPPING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Solar and COSCO SHIPPING.

Diversification Opportunities for Invesco Solar and COSCO SHIPPING

0.01
  Correlation Coefficient

Significant diversification

The 3 months correlation between Invesco and COSCO is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Solar ETF and COSCO SHIPPING HOLDINGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSCO SHIPPING HOLDINGS and Invesco Solar 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 Solar ETF are associated (or correlated) with COSCO SHIPPING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSCO SHIPPING HOLDINGS has no effect on the direction of Invesco Solar i.e., Invesco Solar and COSCO SHIPPING go up and down completely randomly.

Pair Corralation between Invesco Solar and COSCO SHIPPING

Considering the 90-day investment horizon Invesco Solar ETF is expected to generate 1.67 times more return on investment than COSCO SHIPPING. However, Invesco Solar is 1.67 times more volatile than COSCO SHIPPING HOLDINGS. It trades about -0.08 of its potential returns per unit of risk. COSCO SHIPPING HOLDINGS is currently generating about -0.68 per unit of risk. If you would invest  8,235  in Invesco Solar ETF on July 6, 2022 and sell it today you would lose (424.00)  from holding Invesco Solar ETF or give up 5.15% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy80.95%
ValuesDaily Returns

Invesco Solar ETF  vs.  COSCO SHIPPING HOLDINGS

 Performance (%) 
       Timeline  
Invesco Solar ETF 
Invesco Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Solar ETF are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Invesco Solar may actually be approaching a critical reversion point that can send shares even higher in November 2022.

Invesco Price Channel

COSCO SHIPPING HOLDINGS 
COSCO Performance
0 of 100
Over the last 90 days COSCO SHIPPING HOLDINGS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in November 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

COSCO Price Channel

Invesco Solar and COSCO SHIPPING Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Invesco Solar and COSCO SHIPPING

The main advantage of trading using opposite Invesco Solar and COSCO SHIPPING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Solar position performs unexpectedly, COSCO SHIPPING 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 COSCO SHIPPING will offset losses from the drop in COSCO SHIPPING's long position.
Invesco Solar vs. McDonalds Corp
The idea behind Invesco Solar ETF and COSCO SHIPPING HOLDINGS 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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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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