Correlation Between Invesco CurrencyShares and Gabelli ETFs
Can any of the company-specific risk be diversified away by investing in both Invesco CurrencyShares and Gabelli ETFs 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 Gabelli ETFs 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 Gabelli ETFs Trust, you can compare the effects of market volatilities on Invesco CurrencyShares and Gabelli ETFs 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 Gabelli ETFs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco CurrencyShares and Gabelli ETFs.
Diversification Opportunities for Invesco CurrencyShares and Gabelli ETFs
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Invesco and Gabelli is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Invesco CurrencyShares Japanes and Gabelli ETFs Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli ETFs Trust 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 Gabelli ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli ETFs Trust has no effect on the direction of Invesco CurrencyShares i.e., Invesco CurrencyShares and Gabelli ETFs go up and down completely randomly.
Pair Corralation between Invesco CurrencyShares and Gabelli ETFs
Considering the 90-day investment horizon Invesco CurrencyShares Japanese is expected to under-perform the Gabelli ETFs. But the etf apears to be less risky and, when comparing its historical volatility, Invesco CurrencyShares Japanese is 1.79 times less risky than Gabelli ETFs. The etf trades about -0.04 of its potential returns per unit of risk. The Gabelli ETFs Trust is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 3,370 in Gabelli ETFs Trust on August 28, 2024 and sell it today you would earn a total of 223.00 from holding Gabelli ETFs Trust or generate 6.62% 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. Gabelli ETFs Trust
Performance |
| Timeline |
| Invesco CurrencyShares |
| Gabelli ETFs Trust |
Invesco CurrencyShares and Gabelli ETFs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco CurrencyShares and Gabelli ETFs
The main advantage of trading using opposite Invesco CurrencyShares and Gabelli ETFs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco CurrencyShares position performs unexpectedly, Gabelli ETFs 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 Gabelli ETFs will offset losses from the drop in Gabelli ETFs' long position.The idea behind Invesco CurrencyShares Japanese and Gabelli ETFs Trust 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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