Correlation Between Invesco DB and Abrdn Physical

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

By analyzing existing cross correlation between Invesco DB Agriculture and abrdn Physical Gold, you can compare the effects of market volatilities on Invesco DB and Abrdn Physical 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 DB with a short position of Abrdn Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco DB and Abrdn Physical.

Diversification Opportunities for Invesco DB and Abrdn Physical

-0.01

Correlation Coefficient

Invesco DB  Abrdn Physical

Good diversification

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

Pair Corralation between Invesco DB and Abrdn Physical

Considering the 90-day investment horizon Invesco DB is expected to generate 1.14 times less return on investment than Abrdn Physical. In addition to that, Invesco DB is 1.07 times more volatile than abrdn Physical Gold. It trades about 0.08 of its total potential returns per unit of risk. abrdn Physical Gold is currently generating about 0.1 per unit of volatility. If you would invest  1,722  in abrdn Physical Gold on September 13, 2024 and sell it today you would earn a total of  872.00  from holding abrdn Physical Gold or generate 50.64% return on investment over 90 days.

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

Invesco DB Agriculture  vs.  abrdn Physical Gold

Invesco DB Agriculture

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco DB Agriculture are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental drivers, Invesco DB may actually be approaching a critical reversion point that can send shares even higher in January 2025.

abrdn Physical Gold

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in abrdn Physical Gold are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Abrdn Physical is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Invesco DB and Abrdn Physical

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

The idea behind Invesco DB Agriculture and abrdn Physical Gold 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.