Correlation Between Invesco CurrencyShares and Gotham Enhanced

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

By analyzing existing cross correlation between Invesco CurrencyShares Japanese and Gotham Enhanced 500, you can compare the effects of market volatilities on Invesco CurrencyShares and Gotham Enhanced 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 Gotham Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco CurrencyShares and Gotham Enhanced.

Diversification Opportunities for Invesco CurrencyShares and Gotham Enhanced

-0.84

Correlation Coefficient

Invesco CurrencyShares  Gotham Enhanced

Pay attention - limited upside

The 3 months correlation between Invesco and Gotham is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Invesco CurrencyShares Japanes and Gotham Enhanced 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gotham Enhanced 500 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 Japanese are associated (or correlated) with Gotham Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gotham Enhanced 500 has no effect on the direction of Invesco CurrencyShares i.e., Invesco CurrencyShares and Gotham Enhanced go up and down completely randomly.

Pair Corralation between Invesco CurrencyShares and Gotham Enhanced

Considering the 90-day investment horizon Invesco CurrencyShares Japanese is expected to under-perform the Gotham Enhanced. But the etf apears to be less risky and, when comparing its historical volatility, Invesco CurrencyShares Japanese is 1.01 times less risky than Gotham Enhanced. The etf trades about -0.07 of its potential returns per unit of risk. The Gotham Enhanced 500 is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,085  in Gotham Enhanced 500 on August 30, 2024 and sell it today you would earn a total of  204.00  from holding Gotham Enhanced 500 or generate 6.61% return on investment over 90 days.

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

Invesco CurrencyShares Japanes  vs.  Gotham Enhanced 500

Invesco CurrencyShares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco CurrencyShares Japanese has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly 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.

Gotham Enhanced 500

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gotham Enhanced 500 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Gotham Enhanced may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Invesco CurrencyShares and Gotham Enhanced

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

The idea behind Invesco CurrencyShares Japanese and Gotham Enhanced 500 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 Stocks Directory module to find actively traded stocks across global markets.