Correlation Between Invesco CurrencyShares and Pacer Large
Can any of the company-specific risk be diversified away by investing in both Invesco CurrencyShares and Pacer Large 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 Pacer Large 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 Pacer Large Cap, you can compare the effects of market volatilities on Invesco CurrencyShares and Pacer Large 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 Pacer Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco CurrencyShares and Pacer Large.
Diversification Opportunities for Invesco CurrencyShares and Pacer Large
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Invesco and Pacer is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Invesco CurrencyShares Japanes and Pacer Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Large Cap 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 Pacer Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Large Cap has no effect on the direction of Invesco CurrencyShares i.e., Invesco CurrencyShares and Pacer Large go up and down completely randomly.
Pair Corralation between Invesco CurrencyShares and Pacer Large
Considering the 90-day investment horizon Invesco CurrencyShares Japanese is expected to under-perform the Pacer Large. But the etf apears to be less risky and, when comparing its historical volatility, Invesco CurrencyShares Japanese is 1.46 times less risky than Pacer Large. The etf trades about -0.12 of its potential returns per unit of risk. The Pacer Large Cap is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 2,762 in Pacer Large Cap on August 28, 2024 and sell it today you would earn a total of 590.00 from holding Pacer Large Cap or generate 21.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco CurrencyShares Japanes vs. Pacer Large Cap
Performance |
| Timeline |
| Invesco CurrencyShares |
| Pacer Large Cap |
Invesco CurrencyShares and Pacer Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco CurrencyShares and Pacer Large
The main advantage of trading using opposite Invesco CurrencyShares and Pacer Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco CurrencyShares position performs unexpectedly, Pacer Large 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 Pacer Large will offset losses from the drop in Pacer Large's long position.The idea behind Invesco CurrencyShares Japanese and Pacer Large Cap 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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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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