Correlation Between Invesco CurrencyShares and VanEck Emerging
Can any of the company-specific risk be diversified away by investing in both Invesco CurrencyShares and VanEck Emerging 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 VanEck Emerging 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 VanEck Emerging Markets, you can compare the effects of market volatilities on Invesco CurrencyShares and VanEck Emerging 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 VanEck Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco CurrencyShares and VanEck Emerging.
Diversification Opportunities for Invesco CurrencyShares and VanEck Emerging
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Invesco and VanEck is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Invesco CurrencyShares Japanes and VanEck Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Emerging Markets 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 VanEck Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Emerging Markets has no effect on the direction of Invesco CurrencyShares i.e., Invesco CurrencyShares and VanEck Emerging go up and down completely randomly.
Pair Corralation between Invesco CurrencyShares and VanEck Emerging
Considering the 90-day investment horizon Invesco CurrencyShares is expected to generate 6.16 times less return on investment than VanEck Emerging. In addition to that, Invesco CurrencyShares is 1.71 times more volatile than VanEck Emerging Markets. It trades about 0.01 of its total potential returns per unit of risk. VanEck Emerging Markets is currently generating about 0.06 per unit of volatility. If you would invest 1,953 in VanEck Emerging Markets on August 29, 2024 and sell it today you would earn a total of 11.00 from holding VanEck Emerging Markets or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco CurrencyShares Japanes vs. VanEck Emerging Markets
Performance |
| Timeline |
| Invesco CurrencyShares |
| VanEck Emerging Markets |
Invesco CurrencyShares and VanEck Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco CurrencyShares and VanEck Emerging
The main advantage of trading using opposite Invesco CurrencyShares and VanEck Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco CurrencyShares position performs unexpectedly, VanEck Emerging 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 VanEck Emerging will offset losses from the drop in VanEck Emerging's long position.The idea behind Invesco CurrencyShares Japanese and VanEck Emerging Markets 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.
| VanEck Emerging vs. BondBloxx ETF Trust | VanEck Emerging vs. Virtus ETF Trust | VanEck Emerging vs. Ocean Park High | VanEck Emerging vs. Virtus ETF Trust |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |