Correlation Between Invesco MSCI and Invesco CoinShares

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

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

Diversification Opportunities for Invesco MSCI and Invesco CoinShares

0.89

Correlation Coefficient

Invesco MSCI  Invesco CoinShares

Very poor diversification

The 3 months correlation between Invesco and Invesco is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Invesco MSCI USA 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 Invesco MSCI 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 MSCI USA 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 Invesco MSCI i.e., Invesco MSCI and Invesco CoinShares go up and down completely randomly.

Pair Corralation between Invesco MSCI and Invesco CoinShares

Assuming the 90 days trading horizon Invesco MSCI USA is expected to generate 0.32 times more return on investment than Invesco CoinShares. However, Invesco MSCI USA is 3.09 times less risky than Invesco CoinShares. It trades about -0.05 of its potential returns per unit of risk. Invesco CoinShares Global is currently generating about -0.08 per unit of risk. If you would invest  8,998  in Invesco MSCI USA on December 24, 2024 and sell it today you would lose (293.00) from holding Invesco MSCI USA or give up 3.26% of portfolio value over 90 days.

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

Invesco MSCI USA  vs.  Invesco CoinShares Global

Invesco MSCI USA

Risk-Adjusted Performance

Very Weak

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

Invesco CoinShares Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco CoinShares Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Etf's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the fund sophisticated investors.

Pair Trading with Invesco MSCI and Invesco CoinShares

The main advantage of trading using opposite Invesco MSCI and Invesco CoinShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco MSCI 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.

The idea behind Invesco MSCI USA and Invesco CoinShares Global 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.