Correlation Between Invesco CurrencyShares and CYB

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

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

Diversification Opportunities for Invesco CurrencyShares and CYB

0.87

Correlation Coefficient

Invesco CurrencyShares  CYB

Very poor diversification

The 3 months correlation between Invesco and CYB is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Invesco CurrencyShares Austral and CYB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CYB and Invesco CurrencyShares 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 CurrencyShares Australian are associated (or correlated) with CYB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CYB has no effect on the direction of Invesco CurrencyShares i.e., Invesco CurrencyShares and CYB go up and down completely randomly.

Pair Corralation between Invesco CurrencyShares and CYB

Considering the 90-day investment horizon Invesco CurrencyShares Australian is expected to generate 1.46 times more return on investment than CYB. However, Invesco CurrencyShares is 1.46 times more volatile than CYB. It trades about -0.01 of its potential returns per unit of risk. CYB is currently generating about -0.04 per unit of risk. If you would invest  6,488  in Invesco CurrencyShares Australian on September 16, 2024 and sell it today you would lose (194.00) from holding Invesco CurrencyShares Australian or give up 2.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	29.03%
Values	Daily Returns

Invesco CurrencyShares Austral  vs.  CYB

Invesco CurrencyShares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco CurrencyShares Australian has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Invesco CurrencyShares is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

CYB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CYB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CYB is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Invesco CurrencyShares and CYB

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

The idea behind Invesco CurrencyShares Australian and CYB 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..