Correlation Between NYSE Composite and Invesco CurrencyShares
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Invesco CurrencyShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Invesco CurrencyShares Australian, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Invesco CurrencyShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Invesco CurrencyShares.
Diversification Opportunities for NYSE Composite and Invesco CurrencyShares
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and Invesco is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Invesco CurrencyShares Austral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco CurrencyShares and NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Invesco CurrencyShares go up and down completely randomly.
Pair Corralation between NYSE Composite and Invesco CurrencyShares
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.97 times more return on investment than Invesco CurrencyShares. However, NYSE Composite is 1.03 times less risky than Invesco CurrencyShares. It trades about 0.13 of its potential returns per unit of risk. Invesco CurrencyShares Australian is currently generating about -0.11 per unit of risk. If you would invest 1,959,424 in NYSE Composite on August 24, 2024 and sell it today you would earn a total of 37,406 from holding NYSE Composite or generate 1.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Invesco CurrencyShares Austral
Performance |
| Timeline |
NYSE Composite and Invesco CurrencyShares Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Invesco CurrencyShares Australian
Pair trading matchups for Invesco CurrencyShares
Pair Trading with NYSE Composite and Invesco CurrencyShares
The main advantage of trading using opposite NYSE Composite and Invesco CurrencyShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Awilco Drilling PLC | NYSE Composite vs. AKITA Drilling | NYSE Composite vs. SunOpta | NYSE Composite vs. Delek Drilling |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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