Correlation Between IShares 20 and Invesco CurrencyShares
Can any of the company-specific risk be diversified away by investing in both IShares 20 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 IShares 20 and Invesco CurrencyShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares 20 Year and Invesco CurrencyShares Japanese, you can compare the effects of market volatilities on IShares 20 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 IShares 20 with a short position of Invesco CurrencyShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 20 and Invesco CurrencyShares.
Diversification Opportunities for IShares 20 and Invesco CurrencyShares
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Invesco is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding iShares 20 Year and Invesco CurrencyShares Japanes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco CurrencyShares and IShares 20 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 iShares 20 Year 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 IShares 20 i.e., IShares 20 and Invesco CurrencyShares go up and down completely randomly.
Pair Corralation between IShares 20 and Invesco CurrencyShares
Considering the 90-day investment horizon iShares 20 Year is expected to generate 1.58 times more return on investment than Invesco CurrencyShares. However, IShares 20 is 1.58 times more volatile than Invesco CurrencyShares Japanese. It trades about -0.01 of its potential returns per unit of risk. Invesco CurrencyShares Japanese is currently generating about -0.05 per unit of risk. If you would invest 9,703 in iShares 20 Year on November 2, 2024 and sell it today you would lose (869.00) from holding iShares 20 Year or give up 8.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares 20 Year vs. Invesco CurrencyShares Japanes
Performance |
| Timeline |
| iShares 20 Year |
| Invesco CurrencyShares |
IShares 20 and Invesco CurrencyShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares 20 and Invesco CurrencyShares
The main advantage of trading using opposite IShares 20 and Invesco CurrencyShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 20 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.| IShares 20 vs. iShares 7 10 Year | IShares 20 vs. iShares 1 3 Year | IShares 20 vs. iShares Russell 2000 | IShares 20 vs. iShares iBoxx 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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