Correlation Between Invesco CurrencyShares and MKAM ETF
Can any of the company-specific risk be diversified away by investing in both Invesco CurrencyShares and MKAM ETF 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 MKAM ETF 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 MKAM ETF, you can compare the effects of market volatilities on Invesco CurrencyShares and MKAM ETF 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 MKAM ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco CurrencyShares and MKAM ETF.
Diversification Opportunities for Invesco CurrencyShares and MKAM ETF
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Invesco and MKAM is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Invesco CurrencyShares Japanes and MKAM ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MKAM ETF 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 MKAM ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MKAM ETF has no effect on the direction of Invesco CurrencyShares i.e., Invesco CurrencyShares and MKAM ETF go up and down completely randomly.
Pair Corralation between Invesco CurrencyShares and MKAM ETF
Considering the 90-day investment horizon Invesco CurrencyShares Japanese is expected to under-perform the MKAM ETF. In addition to that, Invesco CurrencyShares is 1.75 times more volatile than MKAM ETF. It trades about -0.03 of its total potential returns per unit of risk. MKAM ETF is currently generating about 0.13 per unit of volatility. If you would invest 2,424 in MKAM ETF on September 3, 2024 and sell it today you would earn a total of 559.00 from holding MKAM ETF or generate 23.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 83.64% |
| Values | Daily Returns |
Invesco CurrencyShares Japanes vs. MKAM ETF
Performance |
| Timeline |
| Invesco CurrencyShares |
| MKAM ETF |
Invesco CurrencyShares and MKAM ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco CurrencyShares and MKAM ETF
The main advantage of trading using opposite Invesco CurrencyShares and MKAM ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco CurrencyShares position performs unexpectedly, MKAM ETF 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 MKAM ETF will offset losses from the drop in MKAM ETF's long position.The idea behind Invesco CurrencyShares Japanese and MKAM ETF 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.
| MKAM ETF vs. FT Vest Equity | MKAM ETF vs. Northern Lights | MKAM ETF vs. Dimensional International High | MKAM ETF vs. JPMorgan Fundamental Data |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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