Correlation Between Invesco CurrencyShares and AB Low
Can any of the company-specific risk be diversified away by investing in both Invesco CurrencyShares and AB Low 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 AB Low 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 AB Low Volatility, you can compare the effects of market volatilities on Invesco CurrencyShares and AB Low 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 AB Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco CurrencyShares and AB Low.
Diversification Opportunities for Invesco CurrencyShares and AB Low
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Invesco and LOWV is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Invesco CurrencyShares Japanes and AB Low Volatility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Low Volatility 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 AB Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Low Volatility has no effect on the direction of Invesco CurrencyShares i.e., Invesco CurrencyShares and AB Low go up and down completely randomly.
Pair Corralation between Invesco CurrencyShares and AB Low
Considering the 90-day investment horizon Invesco CurrencyShares Japanese is expected to under-perform the AB Low. In addition to that, Invesco CurrencyShares is 1.03 times more volatile than AB Low Volatility. It trades about -0.03 of its total potential returns per unit of risk. AB Low Volatility is currently generating about 0.14 per unit of volatility. If you would invest 5,270 in AB Low Volatility on August 31, 2024 and sell it today you would earn a total of 1,947 from holding AB Low Volatility or generate 36.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Invesco CurrencyShares Japanes vs. AB Low Volatility
Performance |
| Timeline |
| Invesco CurrencyShares |
| AB Low Volatility |
Invesco CurrencyShares and AB Low Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco CurrencyShares and AB Low
The main advantage of trading using opposite Invesco CurrencyShares and AB Low positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco CurrencyShares position performs unexpectedly, AB Low 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 AB Low will offset losses from the drop in AB Low's long position.The idea behind Invesco CurrencyShares Japanese and AB Low Volatility 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.
| AB Low vs. AB High Dividend | AB Low vs. AB Disruptors ETF | AB Low vs. Ab Tax Aware Short | AB Low vs. AB Ultra Short |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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