Correlation Between Xtrackers Nikkei and Invesco CoinShares
Can any of the company-specific risk be diversified away by investing in both Xtrackers Nikkei 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 Xtrackers Nikkei and Invesco CoinShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers Nikkei 225 and Invesco CoinShares Global, you can compare the effects of market volatilities on Xtrackers Nikkei 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 Xtrackers Nikkei with a short position of Invesco CoinShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers Nikkei and Invesco CoinShares.
Diversification Opportunities for Xtrackers Nikkei and Invesco CoinShares
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xtrackers and Invesco is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers Nikkei 225 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 Xtrackers Nikkei 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 Xtrackers Nikkei 225 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 Xtrackers Nikkei i.e., Xtrackers Nikkei and Invesco CoinShares go up and down completely randomly.
Pair Corralation between Xtrackers Nikkei and Invesco CoinShares
Assuming the 90 days trading horizon Xtrackers Nikkei is expected to generate 3.45 times less return on investment than Invesco CoinShares. But when comparing it to its historical volatility, Xtrackers Nikkei 225 is 2.47 times less risky than Invesco CoinShares. It trades about 0.04 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers Nikkei 225 vs. Invesco CoinShares Global
Performance |
| Timeline |
| Xtrackers Nikkei 225 |
| Invesco CoinShares Global |
Xtrackers Nikkei and Invesco CoinShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers Nikkei and Invesco CoinShares
The main advantage of trading using opposite Xtrackers Nikkei and Invesco CoinShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers Nikkei 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.| Xtrackers Nikkei vs. Xtrackers II Global | Xtrackers Nikkei vs. Xtrackers FTSE | Xtrackers Nikkei vs. Xtrackers SP 500 | Xtrackers Nikkei vs. Xtrackers MSCI |
| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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