Correlation Between Invesco CurrencyShares and Invesco CurrencyShares

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

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

Diversification Opportunities for Invesco CurrencyShares and Invesco CurrencyShares

0.94

Correlation Coefficient

Invesco CurrencyShares  Invesco CurrencyShares

Almost no diversification

The 3 months correlation between Invesco and Invesco is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Invesco CurrencyShares British and Invesco CurrencyShares Austral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco CurrencyShares 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 British are associated (or correlated) with Invesco CurrencyShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco CurrencyShares has no effect on the direction of Invesco CurrencyShares i.e., Invesco CurrencyShares and Invesco CurrencyShares go up and down completely randomly.

Pair Corralation between Invesco CurrencyShares and Invesco CurrencyShares

Considering the 90-day investment horizon Invesco CurrencyShares British is expected to generate 0.77 times more return on investment than Invesco CurrencyShares. However, Invesco CurrencyShares British is 1.29 times less risky than Invesco CurrencyShares. It trades about -0.08 of its potential returns per unit of risk. Invesco CurrencyShares Australian is currently generating about -0.07 per unit of risk. If you would invest  12,530  in Invesco CurrencyShares British on September 1, 2024 and sell it today you would lose (283.00) from holding Invesco CurrencyShares British or give up 2.26% of portfolio value over 90 days.

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

Invesco CurrencyShares British  vs.  Invesco CurrencyShares Austral

Invesco CurrencyShares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco CurrencyShares British 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 current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Invesco CurrencyShares and Invesco CurrencyShares

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

The idea behind Invesco CurrencyShares British and Invesco CurrencyShares Australian 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.