Correlation Between Invesco MSCI and Invesco EURO
Can any of the company-specific risk be diversified away by investing in both Invesco MSCI and Invesco EURO 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 MSCI and Invesco EURO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco MSCI Emerging and Invesco EURO STOXX, you can compare the effects of market volatilities on Invesco MSCI and Invesco EURO 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 MSCI with a short position of Invesco EURO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco MSCI and Invesco EURO.
Diversification Opportunities for Invesco MSCI and Invesco EURO
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Invesco and Invesco is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Invesco MSCI Emerging and Invesco EURO STOXX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco EURO STOXX and Invesco MSCI 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 MSCI Emerging are associated (or correlated) with Invesco EURO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco EURO STOXX has no effect on the direction of Invesco MSCI i.e., Invesco MSCI and Invesco EURO go up and down completely randomly.
Pair Corralation between Invesco MSCI and Invesco EURO
Assuming the 90 days trading horizon Invesco MSCI Emerging is expected to under-perform the Invesco EURO. In addition to that, Invesco MSCI is 1.4 times more volatile than Invesco EURO STOXX. It trades about -0.03 of its total potential returns per unit of risk. Invesco EURO STOXX is currently generating about 0.08 per unit of volatility. If you would invest 721,900 in Invesco EURO STOXX on August 25, 2024 and sell it today you would earn a total of 128,650 from holding Invesco EURO STOXX or generate 17.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco MSCI Emerging vs. Invesco EURO STOXX
Performance |
| Timeline |
| Invesco MSCI Emerging |
| Invesco EURO STOXX |
Invesco MSCI and Invesco EURO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco MSCI and Invesco EURO
The main advantage of trading using opposite Invesco MSCI and Invesco EURO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco MSCI position performs unexpectedly, Invesco EURO 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 EURO will offset losses from the drop in Invesco EURO's long position.| Invesco MSCI vs. Leverage Shares 3x | Invesco MSCI vs. Leverage Shares 3x | Invesco MSCI vs. Leverage Shares 3x | Invesco MSCI vs. WisdomTree Short GBP |
| Invesco EURO vs. Invesco MSCI Emerging | Invesco EURO vs. Invesco Markets Plc | Invesco EURO vs. Invesco FTSE RAFI | Invesco EURO vs. Invesco FTSE Emerging |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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