Correlation Between Legal General and Invesco CoinShares
Can any of the company-specific risk be diversified away by investing in both Legal General and Invesco CoinShares 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 Legal General and Invesco CoinShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legal General UCITS and Invesco CoinShares Global, you can compare the effects of market volatilities on Legal General and Invesco CoinShares 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 Legal General with a short position of Invesco CoinShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legal General and Invesco CoinShares.
Diversification Opportunities for Legal General and Invesco CoinShares
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Legal and Invesco is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Legal General UCITS and Invesco CoinShares Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco CoinShares Global and Legal General 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 Legal General UCITS are associated (or correlated) with Invesco CoinShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco CoinShares Global has no effect on the direction of Legal General i.e., Legal General and Invesco CoinShares go up and down completely randomly.
Pair Corralation between Legal General and Invesco CoinShares
Assuming the 90 days trading horizon Legal General is expected to generate 1.77 times less return on investment than Invesco CoinShares. But when comparing it to its historical volatility, Legal General UCITS is 2.33 times less risky than Invesco CoinShares. It trades about 0.08 of its potential returns per unit of risk. Invesco CoinShares Global is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 9,201 in Invesco CoinShares Global on October 26, 2024 and sell it today you would earn a total of 1,803 from holding Invesco CoinShares Global or generate 19.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legal General UCITS vs. Invesco CoinShares Global
Performance |
| Timeline |
| Legal General UCITS |
| Invesco CoinShares Global |
Legal General and Invesco CoinShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legal General and Invesco CoinShares
The main advantage of trading using opposite Legal General and Invesco CoinShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legal General position performs unexpectedly, Invesco CoinShares 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 Invesco CoinShares will offset losses from the drop in Invesco CoinShares' long position.| Legal General vs. UBS Fund Solutions | Legal General vs. Xtrackers II | Legal General vs. Xtrackers Nikkei 225 | Legal General vs. iShares VII PLC |
| Invesco CoinShares vs. Invesco Quantitative Strats | Invesco CoinShares vs. Invesco JPX Nikkei 400 | Invesco CoinShares vs. Invesco Markets plc | Invesco CoinShares vs. Invesco MSCI Europe |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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