Correlation Between Invesco MSCI and Rize Circular

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

By analyzing existing cross correlation between Invesco MSCI China and Rize Circular Economy, you can compare the effects of market volatilities on Invesco MSCI and Rize Circular 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 MSCI with a short position of Rize Circular. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco MSCI and Rize Circular.

Diversification Opportunities for Invesco MSCI and Rize Circular

0.86

Correlation Coefficient

Invesco MSCI  Rize Circular

Very poor diversification

The 3 months correlation between Invesco and Rize is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Invesco MSCI China and Rize Circular Economy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rize Circular Economy and Invesco MSCI 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 MSCI China are associated (or correlated) with Rize Circular. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rize Circular Economy has no effect on the direction of Invesco MSCI i.e., Invesco MSCI and Rize Circular go up and down completely randomly.

Pair Corralation between Invesco MSCI and Rize Circular

Assuming the 90 days trading horizon Invesco MSCI China is expected to generate 1.0 times more return on investment than Rize Circular. However, Invesco MSCI China is 1.0 times less risky than Rize Circular. It trades about 0.18 of its potential returns per unit of risk. Rize Circular Economy is currently generating about 0.12 per unit of risk. If you would invest  194,990  in Invesco MSCI China on April 24, 2025 and sell it today you would earn a total of  20,760  from holding Invesco MSCI China or generate 10.65% return on investment over 90 days.

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

Invesco MSCI China  vs.  Rize Circular Economy

Invesco MSCI China

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco MSCI China are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Invesco MSCI may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Rize Circular Economy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rize Circular Economy are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Rize Circular may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Invesco MSCI and Rize Circular

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

The idea behind Invesco MSCI China and Rize Circular Economy 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.