Correlation Between Invesco CurrencyShares and IShares ESG
Can any of the company-specific risk be diversified away by investing in both Invesco CurrencyShares and IShares ESG 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 IShares ESG 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 iShares ESG Aware, you can compare the effects of market volatilities on Invesco CurrencyShares and IShares ESG 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 IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco CurrencyShares and IShares ESG.
Diversification Opportunities for Invesco CurrencyShares and IShares ESG
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Invesco and IShares is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Invesco CurrencyShares Japanes and iShares ESG Aware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Aware 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 IShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG Aware has no effect on the direction of Invesco CurrencyShares i.e., Invesco CurrencyShares and IShares ESG go up and down completely randomly.
Pair Corralation between Invesco CurrencyShares and IShares ESG
Considering the 90-day investment horizon Invesco CurrencyShares Japanese is expected to under-perform the IShares ESG. But the etf apears to be less risky and, when comparing its historical volatility, Invesco CurrencyShares Japanese is 1.22 times less risky than IShares ESG. The etf trades about -0.04 of its potential returns per unit of risk. The iShares ESG Aware is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 8,611 in iShares ESG Aware on August 26, 2024 and sell it today you would earn a total of 4,512 from holding iShares ESG Aware or generate 52.4% 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. iShares ESG Aware
Performance |
| Timeline |
| Invesco CurrencyShares |
| iShares ESG Aware |
Invesco CurrencyShares and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco CurrencyShares and IShares ESG
The main advantage of trading using opposite Invesco CurrencyShares and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco CurrencyShares position performs unexpectedly, IShares ESG 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 IShares ESG will offset losses from the drop in IShares ESG's long position.The idea behind Invesco CurrencyShares Japanese and iShares ESG Aware 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.
| IShares ESG vs. Morningstar Unconstrained Allocation | IShares ESG vs. High Yield Municipal Fund | IShares ESG vs. Via Renewables | IShares ESG vs. Knife River |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |