Correlation Between Xtrackers Harvest and Invesco Golden

Can any of the company-specific risk be diversified away by investing in both Xtrackers Harvest and Invesco Golden 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 Harvest and Invesco Golden into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Xtrackers Harvest CSI and Invesco Golden Dragon, you can compare the effects of market volatilities on Xtrackers Harvest and Invesco Golden 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 Harvest with a short position of Invesco Golden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers Harvest and Invesco Golden.

Diversification Opportunities for Xtrackers Harvest and Invesco Golden

0.88

Correlation Coefficient

Xtrackers Harvest  Invesco Golden

Very poor diversification

The 3 months correlation between Xtrackers and Invesco is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers Harvest CSI and Invesco Golden Dragon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Golden Dragon and Xtrackers Harvest 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 Harvest CSI are associated (or correlated) with Invesco Golden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Golden Dragon has no effect on the direction of Xtrackers Harvest i.e., Xtrackers Harvest and Invesco Golden go up and down completely randomly.

Pair Corralation between Xtrackers Harvest and Invesco Golden

Given the investment horizon of 90 days Xtrackers Harvest CSI is expected to under-perform the Invesco Golden. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers Harvest CSI is 1.04 times less risky than Invesco Golden. The etf trades about -0.01 of its potential returns per unit of risk. The Invesco Golden Dragon is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,678  in Invesco Golden Dragon on September 25, 2024 and sell it today you would lose (11.00) from holding Invesco Golden Dragon or give up 0.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Xtrackers Harvest CSI  vs.  Invesco Golden Dragon

Xtrackers Harvest CSI

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers Harvest CSI are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively sluggish technical indicators, Xtrackers Harvest reported solid returns over the last few months and may actually be approaching a breakup point.

Invesco Golden Dragon

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Golden Dragon are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical and fundamental indicators, Invesco Golden may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Xtrackers Harvest and Invesco Golden

The main advantage of trading using opposite Xtrackers Harvest and Invesco Golden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers Harvest position performs unexpectedly, Invesco Golden 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 Golden will offset losses from the drop in Invesco Golden's long position.

The idea behind Xtrackers Harvest CSI and Invesco Golden Dragon pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.