Correlation Between IPC MEXICO and Invesco CurrencyShares
Can any of the company-specific risk be diversified away by investing in both IPC MEXICO and Invesco CurrencyShares 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 IPC MEXICO and Invesco CurrencyShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPC MEXICO and Invesco CurrencyShares Euro, you can compare the effects of market volatilities on IPC MEXICO and Invesco CurrencyShares 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 IPC MEXICO with a short position of Invesco CurrencyShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPC MEXICO and Invesco CurrencyShares.
Diversification Opportunities for IPC MEXICO and Invesco CurrencyShares
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IPC and Invesco is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding IPC MEXICO and Invesco CurrencyShares Euro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco CurrencyShares and IPC MEXICO 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 IPC MEXICO are associated (or correlated) with Invesco CurrencyShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco CurrencyShares has no effect on the direction of IPC MEXICO i.e., IPC MEXICO and Invesco CurrencyShares go up and down completely randomly.
Pair Corralation between IPC MEXICO and Invesco CurrencyShares
Assuming the 90 days trading horizon IPC MEXICO is expected to under-perform the Invesco CurrencyShares. But the index apears to be less risky and, when comparing its historical volatility, IPC MEXICO is 1.22 times less risky than Invesco CurrencyShares. The index trades about -0.1 of its potential returns per unit of risk. The Invesco CurrencyShares Euro is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 196,245 in Invesco CurrencyShares Euro on August 31, 2024 and sell it today you would earn a total of 5,340 from holding Invesco CurrencyShares Euro or generate 2.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
IPC MEXICO vs. Invesco CurrencyShares Euro
Performance |
| Timeline |
IPC MEXICO and Invesco CurrencyShares Volatility Contrast
Predicted Return Density |
| Returns |
IPC MEXICO
Pair trading matchups for IPC MEXICO
Invesco CurrencyShares Euro
Pair trading matchups for Invesco CurrencyShares
Pair Trading with IPC MEXICO and Invesco CurrencyShares
The main advantage of trading using opposite IPC MEXICO and Invesco CurrencyShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPC MEXICO position performs unexpectedly, Invesco CurrencyShares 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 CurrencyShares will offset losses from the drop in Invesco CurrencyShares' long position.| IPC MEXICO vs. Genworth Financial | IPC MEXICO vs. Cognizant Technology Solutions | IPC MEXICO vs. CVS Health | IPC MEXICO vs. First Republic Bank |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |