Correlation Between Invesco Agriculture and Abrdn ETFs

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

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

Diversification Opportunities for Invesco Agriculture and Abrdn ETFs

0.28

Correlation Coefficient

Invesco Agriculture  Abrdn ETFs

Modest diversification

The 3 months correlation between Invesco and Abrdn is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Agriculture Commodity and abrdn ETFs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on abrdn ETFs and Invesco Agriculture 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 Agriculture Commodity are associated (or correlated) with Abrdn ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of abrdn ETFs has no effect on the direction of Invesco Agriculture i.e., Invesco Agriculture and Abrdn ETFs go up and down completely randomly.

Pair Corralation between Invesco Agriculture and Abrdn ETFs

Given the investment horizon of 90 days Invesco Agriculture Commodity is expected to generate 0.68 times more return on investment than Abrdn ETFs. However, Invesco Agriculture Commodity is 1.48 times less risky than Abrdn ETFs. It trades about 0.14 of its potential returns per unit of risk. abrdn ETFs is currently generating about 0.07 per unit of risk. If you would invest  3,536  in Invesco Agriculture Commodity on September 5, 2024 and sell it today you would earn a total of  283.00  from holding Invesco Agriculture Commodity or generate 8.0% return on investment over 90 days.

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

Invesco Agriculture Commodity  vs.  abrdn ETFs

Invesco Agriculture

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Agriculture Commodity are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal fundamental drivers, Invesco Agriculture may actually be approaching a critical reversion point that can send shares even higher in January 2025.

abrdn ETFs

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in abrdn ETFs are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Abrdn ETFs is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Invesco Agriculture and Abrdn ETFs

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

The idea behind Invesco Agriculture Commodity and abrdn ETFs 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.