Correlation Between Invesco CoinShares and Invesco EURO

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

By analyzing existing cross correlation between Invesco CoinShares Global and Invesco EURO STOXX, you can compare the effects of market volatilities on Invesco CoinShares and Invesco EURO 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 Invesco CoinShares with a short position of Invesco EURO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco CoinShares and Invesco EURO.

Diversification Opportunities for Invesco CoinShares and Invesco EURO

-0.38

Correlation Coefficient

Invesco CoinShares  Invesco EURO

Very good diversification

The 3 months correlation between Invesco and Invesco is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Invesco CoinShares Global and Invesco EURO STOXX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco EURO STOXX and Invesco CoinShares 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 Invesco CoinShares Global are associated (or correlated) with Invesco EURO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco EURO STOXX has no effect on the direction of Invesco CoinShares i.e., Invesco CoinShares and Invesco EURO go up and down completely randomly.

Pair Corralation between Invesco CoinShares and Invesco EURO

Assuming the 90 days trading horizon Invesco CoinShares Global is expected to under-perform the Invesco EURO. In addition to that, Invesco CoinShares is 4.12 times more volatile than Invesco EURO STOXX. It trades about -0.3 of its total potential returns per unit of risk. Invesco EURO STOXX is currently generating about -0.16 per unit of volatility. If you would invest  12,340  in Invesco EURO STOXX on October 7, 2024 and sell it today you would lose (218.00) from holding Invesco EURO STOXX or give up 1.77% of portfolio value over 90 days.

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

Invesco CoinShares Global  vs.  Invesco EURO STOXX

Invesco CoinShares Global

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco CoinShares Global are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Invesco CoinShares showed solid returns over the last few months and may actually be approaching a breakup point.

Invesco EURO STOXX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco EURO STOXX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Invesco EURO is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Invesco CoinShares and Invesco EURO

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

The idea behind Invesco CoinShares Global and Invesco EURO STOXX 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.