Correlation Between Teucrium Sugar and Invesco DB

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

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

Diversification Opportunities for Teucrium Sugar and Invesco DB

-0.79

Correlation Coefficient

Teucrium Sugar  Invesco DB

Pay attention - limited upside

The 3 months correlation between Teucrium and Invesco is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Teucrium Sugar and Invesco DB Agriculture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco DB Agriculture and Teucrium Sugar 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 Teucrium Sugar are associated (or correlated) with Invesco DB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco DB Agriculture has no effect on the direction of Teucrium Sugar i.e., Teucrium Sugar and Invesco DB go up and down completely randomly.

Pair Corralation between Teucrium Sugar and Invesco DB

Given the investment horizon of 90 days Teucrium Sugar is expected to under-perform the Invesco DB. In addition to that, Teucrium Sugar is 1.18 times more volatile than Invesco DB Agriculture. It trades about -0.24 of its total potential returns per unit of risk. Invesco DB Agriculture is currently generating about 0.05 per unit of volatility. If you would invest  2,639  in Invesco DB Agriculture on October 22, 2024 and sell it today you would earn a total of  21.00  from holding Invesco DB Agriculture or generate 0.8% return on investment over 90 days.

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

Teucrium Sugar  vs.  Invesco DB Agriculture

Teucrium Sugar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teucrium Sugar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Invesco DB Agriculture

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco DB Agriculture are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental drivers, Invesco DB may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Teucrium Sugar and Invesco DB

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

The idea behind Teucrium Sugar and Invesco DB Agriculture 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.