Correlation Between Invesco CurrencyShares and Capital Group
Can any of the company-specific risk be diversified away by investing in both Invesco CurrencyShares and Capital Group 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 Capital Group 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 Capital Group Core, you can compare the effects of market volatilities on Invesco CurrencyShares and Capital Group 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 Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco CurrencyShares and Capital Group.
Diversification Opportunities for Invesco CurrencyShares and Capital Group
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Invesco and Capital is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Invesco CurrencyShares Japanes and Capital Group Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Core 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 Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Core has no effect on the direction of Invesco CurrencyShares i.e., Invesco CurrencyShares and Capital Group go up and down completely randomly.
Pair Corralation between Invesco CurrencyShares and Capital Group
Considering the 90-day investment horizon Invesco CurrencyShares is expected to generate 1.93 times less return on investment than Capital Group. In addition to that, Invesco CurrencyShares is 1.59 times more volatile than Capital Group Core. It trades about 0.09 of its total potential returns per unit of risk. Capital Group Core is currently generating about 0.27 per unit of volatility. If you would invest 3,098 in Capital Group Core on September 1, 2024 and sell it today you would earn a total of 98.00 from holding Capital Group Core or generate 3.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Invesco CurrencyShares Japanes vs. Capital Group Core
Performance |
| Timeline |
| Invesco CurrencyShares |
| Capital Group Core |
Invesco CurrencyShares and Capital Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco CurrencyShares and Capital Group
The main advantage of trading using opposite Invesco CurrencyShares and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco CurrencyShares position performs unexpectedly, Capital Group 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 Capital Group will offset losses from the drop in Capital Group's long position.| Invesco CurrencyShares vs. Invesco CurrencyShares Canadian | Invesco CurrencyShares vs. Invesco CurrencyShares British |
| Capital Group vs. EA Series Trust | Capital Group vs. Northern Lights | Capital Group vs. Northern Lights | Capital Group vs. Northern Lights |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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