Correlation Between Invesco DB and Abrdn ETFs

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Can any of the company-specific risk be diversified away by investing in both Invesco DB and Abrdn ETFs 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 DB and Abrdn ETFs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco DB Agriculture and abrdn ETFs , you can compare the effects of market volatilities on Invesco DB and Abrdn ETFs 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 DB with a short position of Abrdn ETFs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco DB and Abrdn ETFs.

Diversification Opportunities for Invesco DB and Abrdn ETFs

-0.65
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Invesco and Abrdn is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Invesco DB Agriculture and abrdn ETFs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on abrdn ETFs and Invesco DB 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 DB Agriculture are associated (or correlated) with Abrdn ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of abrdn ETFs has no effect on the direction of Invesco DB i.e., Invesco DB and Abrdn ETFs go up and down completely randomly.

Pair Corralation between Invesco DB and Abrdn ETFs

Considering the 90-day investment horizon Invesco DB Agriculture is expected to generate 0.82 times more return on investment than Abrdn ETFs. However, Invesco DB Agriculture is 1.22 times less risky than Abrdn ETFs. It trades about 0.28 of its potential returns per unit of risk. abrdn ETFs is currently generating about -0.02 per unit of risk. If you would invest  2,384  in Invesco DB Agriculture on October 24, 2024 and sell it today you would earn a total of  338.00  from holding Invesco DB Agriculture or generate 14.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy98.33%
ValuesDaily Returns

Invesco DB Agriculture  vs.  abrdn ETFs

 Performance 
       Timeline  
Invesco DB Agriculture 

Risk-Adjusted Performance

22 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Invesco DB Agriculture are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental drivers, Invesco DB sustained solid returns over the last few months and may actually be approaching a breakup point.
abrdn ETFs 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days abrdn ETFs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Abrdn ETFs is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Invesco DB and Abrdn ETFs Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Invesco DB and Abrdn ETFs

The main advantage of trading using opposite Invesco DB and Abrdn ETFs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco DB position performs unexpectedly, Abrdn ETFs 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 Abrdn ETFs will offset losses from the drop in Abrdn ETFs' long position.
The idea behind Invesco DB Agriculture and abrdn ETFs 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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