Correlation Between United States and Invesco DB
Can any of the company-specific risk be diversified away by investing in both United States and Invesco DB 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 United States and Invesco DB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Brent and Invesco DB Energy, you can compare the effects of market volatilities on United States and Invesco DB 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 United States with a short position of Invesco DB. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Invesco DB.
Diversification Opportunities for United States and Invesco DB
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between United and Invesco is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding United States Brent and Invesco DB Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco DB Energy and United States 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 United States Brent are associated (or correlated) with Invesco DB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco DB Energy has no effect on the direction of United States i.e., United States and Invesco DB go up and down completely randomly.
Pair Corralation between United States and Invesco DB
Considering the 90-day investment horizon United States Brent is expected to generate 1.19 times more return on investment than Invesco DB. However, United States is 1.19 times more volatile than Invesco DB Energy. It trades about 0.01 of its potential returns per unit of risk. Invesco DB Energy is currently generating about -0.01 per unit of risk. If you would invest 2,885 in United States Brent on August 28, 2024 and sell it today you would earn a total of 22.00 from holding United States Brent or generate 0.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Brent vs. Invesco DB Energy
Performance |
| Timeline |
| United States Brent |
| Invesco DB Energy |
United States and Invesco DB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Invesco DB
The main advantage of trading using opposite United States and Invesco DB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, Invesco DB 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 DB will offset losses from the drop in Invesco DB's long position.| United States vs. Aquagold International | United States vs. Morningstar Unconstrained Allocation | United States vs. High Yield Municipal Fund | United States vs. Thrivent High Yield |
| Invesco DB vs. Aquagold International | Invesco DB vs. Morningstar Unconstrained Allocation | Invesco DB vs. High Yield Municipal Fund | Invesco DB vs. Thrivent High Yield |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |