Correlation Between Invesco CurrencyShares and First Trust
Can any of the company-specific risk be diversified away by investing in both Invesco CurrencyShares and First Trust 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 First Trust 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 First Trust Bloomberg, you can compare the effects of market volatilities on Invesco CurrencyShares and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco CurrencyShares and First Trust.
Diversification Opportunities for Invesco CurrencyShares and First Trust
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Invesco and First is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Invesco CurrencyShares Japanes and First Trust Bloomberg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Bloomberg 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Bloomberg has no effect on the direction of Invesco CurrencyShares i.e., Invesco CurrencyShares and First Trust go up and down completely randomly.
Pair Corralation between Invesco CurrencyShares and First Trust
Considering the 90-day investment horizon Invesco CurrencyShares is expected to generate 3.11 times less return on investment than First Trust. In addition to that, Invesco CurrencyShares is 1.18 times more volatile than First Trust Bloomberg. It trades about 0.05 of its total potential returns per unit of risk. First Trust Bloomberg is currently generating about 0.17 per unit of volatility. If you would invest 3,752 in First Trust Bloomberg on September 1, 2024 and sell it today you would earn a total of 543.00 from holding First Trust Bloomberg or generate 14.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco CurrencyShares Japanes vs. First Trust Bloomberg
Performance |
| Timeline |
| Invesco CurrencyShares |
| First Trust Bloomberg |
Invesco CurrencyShares and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco CurrencyShares and First Trust
The main advantage of trading using opposite Invesco CurrencyShares and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco CurrencyShares position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Invesco CurrencyShares vs. Invesco CurrencyShares Canadian | Invesco CurrencyShares vs. Invesco CurrencyShares British |
| First Trust vs. Vanguard Total Stock | First Trust vs. SPDR SP 500 | First Trust vs. iShares Core SP | First Trust vs. Vanguard Dividend Appreciation |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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