Correlation Between Invesco CurrencyShares and IShares Core
Can any of the company-specific risk be diversified away by investing in both Invesco CurrencyShares and IShares Core 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 Core 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 Core SP, you can compare the effects of market volatilities on Invesco CurrencyShares and IShares Core 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 Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco CurrencyShares and IShares Core.
Diversification Opportunities for Invesco CurrencyShares and IShares Core
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Invesco and IShares is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Invesco CurrencyShares Japanes and iShares Core SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core SP 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 Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core SP has no effect on the direction of Invesco CurrencyShares i.e., Invesco CurrencyShares and IShares Core go up and down completely randomly.
Pair Corralation between Invesco CurrencyShares and IShares Core
Considering the 90-day investment horizon Invesco CurrencyShares is expected to generate 36.76 times less return on investment than IShares Core. But when comparing it to its historical volatility, Invesco CurrencyShares Japanese is 1.12 times less risky than IShares Core. It trades about 0.01 of its potential returns per unit of risk. iShares Core SP is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 58,365 in iShares Core SP on August 29, 2024 and sell it today you would earn a total of 2,011 from holding iShares Core SP or generate 3.45% 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 Core SP
Performance |
| Timeline |
| Invesco CurrencyShares |
| iShares Core SP |
Invesco CurrencyShares and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco CurrencyShares and IShares Core
The main advantage of trading using opposite Invesco CurrencyShares and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco CurrencyShares position performs unexpectedly, IShares Core 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 Core will offset losses from the drop in IShares Core's long position.The idea behind Invesco CurrencyShares Japanese and iShares Core SP 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 Core vs. iShares Core SP | IShares Core vs. iShares Core SP | IShares Core vs. iShares SP 500 | IShares Core vs. iShares Russell 2000 |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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