Correlation Between Invesco DB and United States
Can any of the company-specific risk be diversified away by investing in both Invesco DB and United States 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 DB and United States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco DB Oil and United States 12, you can compare the effects of market volatilities on Invesco DB and United States 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 DB with a short position of United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco DB and United States.
Diversification Opportunities for Invesco DB and United States
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Invesco and United is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Invesco DB Oil and United States 12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States 12 and Invesco DB 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 DB Oil are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States 12 has no effect on the direction of Invesco DB i.e., Invesco DB and United States go up and down completely randomly.
Pair Corralation between Invesco DB and United States
Considering the 90-day investment horizon Invesco DB is expected to generate 25.76 times less return on investment than United States. But when comparing it to its historical volatility, Invesco DB Oil is 1.16 times less risky than United States. It trades about 0.01 of its potential returns per unit of risk. United States 12 is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 730.00 in United States 12 on August 24, 2024 and sell it today you would earn a total of 43.00 from holding United States 12 or generate 5.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco DB Oil vs. United States 12
Performance |
| Timeline |
| Invesco DB Oil |
| United States 12 |
Invesco DB and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco DB and United States
The main advantage of trading using opposite Invesco DB and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco DB position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.| Invesco DB vs. Invesco DB Energy | Invesco DB vs. United States 12 | Invesco DB vs. Invesco DB Base | Invesco DB vs. Invesco DB Precious |
| United States vs. United States 12 | United States vs. United States Gasoline | United States vs. First Trust Natural | United States vs. ProShares UltraShort Bloomberg |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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