Correlation Between Invesco CurrencyShares and ClearBridge Dividend
Can any of the company-specific risk be diversified away by investing in both Invesco CurrencyShares and ClearBridge Dividend 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 ClearBridge Dividend 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 ClearBridge Dividend Strategy, you can compare the effects of market volatilities on Invesco CurrencyShares and ClearBridge Dividend 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 ClearBridge Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco CurrencyShares and ClearBridge Dividend.
Diversification Opportunities for Invesco CurrencyShares and ClearBridge Dividend
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Invesco and ClearBridge is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Invesco CurrencyShares Japanes and ClearBridge Dividend Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ClearBridge Dividend 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 ClearBridge Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ClearBridge Dividend has no effect on the direction of Invesco CurrencyShares i.e., Invesco CurrencyShares and ClearBridge Dividend go up and down completely randomly.
Pair Corralation between Invesco CurrencyShares and ClearBridge Dividend
Considering the 90-day investment horizon Invesco CurrencyShares is expected to generate 2.74 times less return on investment than ClearBridge Dividend. In addition to that, Invesco CurrencyShares is 1.05 times more volatile than ClearBridge Dividend Strategy. It trades about 0.09 of its total potential returns per unit of risk. ClearBridge Dividend Strategy is currently generating about 0.25 per unit of volatility. If you would invest 5,105 in ClearBridge Dividend Strategy on August 30, 2024 and sell it today you would earn a total of 221.00 from holding ClearBridge Dividend Strategy or generate 4.33% 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. ClearBridge Dividend Strategy
Performance |
| Timeline |
| Invesco CurrencyShares |
| ClearBridge Dividend |
Invesco CurrencyShares and ClearBridge Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco CurrencyShares and ClearBridge Dividend
The main advantage of trading using opposite Invesco CurrencyShares and ClearBridge Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco CurrencyShares position performs unexpectedly, ClearBridge Dividend 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 ClearBridge Dividend will offset losses from the drop in ClearBridge Dividend's long position.The idea behind Invesco CurrencyShares Japanese and ClearBridge Dividend Strategy 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.
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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