Correlation Between Invesco CurrencyShares and Invesco DB

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

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

Diversification Opportunities for Invesco CurrencyShares and Invesco DB

0.0

Correlation Coefficient

Invesco CurrencyShares  Invesco DB

Pay attention - limited upside

The 3 months correlation between Invesco and Invesco is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Invesco CurrencyShares Japanes and Invesco DB Commodity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco DB Commodity and Invesco CurrencyShares 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 CurrencyShares Japanese 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 Commodity has no effect on the direction of Invesco CurrencyShares i.e., Invesco CurrencyShares and Invesco DB go up and down completely randomly.

Pair Corralation between Invesco CurrencyShares and Invesco DB

If you would invest  122,661  in Invesco CurrencyShares Japanese on September 12, 2024 and sell it today you would earn a total of  1,819  from holding Invesco CurrencyShares Japanese or generate 1.48% return on investment over 90 days.

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

Invesco CurrencyShares Japanes  vs.  Invesco DB Commodity

Invesco CurrencyShares

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco CurrencyShares Japanese are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Invesco CurrencyShares is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Invesco DB Commodity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco DB Commodity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Invesco DB is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Invesco CurrencyShares and Invesco DB

The main advantage of trading using opposite Invesco CurrencyShares and Invesco DB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco CurrencyShares 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 Invesco CurrencyShares Japanese and Invesco DB Commodity 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.