Correlation Between Invesco CurrencyShares and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Invesco CurrencyShares and Goldman Sachs 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 Goldman Sachs 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 Goldman Sachs ActiveBeta, you can compare the effects of market volatilities on Invesco CurrencyShares and Goldman Sachs 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 Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco CurrencyShares and Goldman Sachs.
Diversification Opportunities for Invesco CurrencyShares and Goldman Sachs
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Invesco and Goldman is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Invesco CurrencyShares Japanes and Goldman Sachs ActiveBeta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs ActiveBeta 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs ActiveBeta has no effect on the direction of Invesco CurrencyShares i.e., Invesco CurrencyShares and Goldman Sachs go up and down completely randomly.
Pair Corralation between Invesco CurrencyShares and Goldman Sachs
Considering the 90-day investment horizon Invesco CurrencyShares is expected to generate 2.72 times less return on investment than Goldman Sachs. In addition to that, Invesco CurrencyShares is 1.05 times more volatile than Goldman Sachs ActiveBeta. It trades about 0.13 of its total potential returns per unit of risk. Goldman Sachs ActiveBeta is currently generating about 0.38 per unit of volatility. If you would invest 11,254 in Goldman Sachs ActiveBeta on September 2, 2024 and sell it today you would earn a total of 706.00 from holding Goldman Sachs ActiveBeta or generate 6.27% 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. Goldman Sachs ActiveBeta
Performance |
| Timeline |
| Invesco CurrencyShares |
| Goldman Sachs ActiveBeta |
Invesco CurrencyShares and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco CurrencyShares and Goldman Sachs
The main advantage of trading using opposite Invesco CurrencyShares and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco CurrencyShares position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.The idea behind Invesco CurrencyShares Japanese and Goldman Sachs ActiveBeta 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.
| Goldman Sachs vs. Goldman Sachs ActiveBeta | Goldman Sachs vs. Goldman Sachs ActiveBeta | Goldman Sachs vs. iShares Equity Factor | Goldman Sachs vs. Goldman Sachs ActiveBeta |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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