Correlation Between Invesco CurrencyShares and IShares Floating

Can any of the company-specific risk be diversified away by investing in both Invesco CurrencyShares and IShares Floating 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 IShares Floating 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 iShares Floating Rate, you can compare the effects of market volatilities on Invesco CurrencyShares and IShares Floating 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 IShares Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco CurrencyShares and IShares Floating.

Diversification Opportunities for Invesco CurrencyShares and IShares Floating

0.92

Correlation Coefficient

Invesco CurrencyShares  IShares Floating

Almost no diversification

The 3 months correlation between Invesco and IShares is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Invesco CurrencyShares Japanes and iShares Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Floating Rate 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 IShares Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Floating Rate has no effect on the direction of Invesco CurrencyShares i.e., Invesco CurrencyShares and IShares Floating go up and down completely randomly.

Pair Corralation between Invesco CurrencyShares and IShares Floating

Considering the 90-day investment horizon Invesco CurrencyShares Japanese is expected to generate 15.53 times more return on investment than IShares Floating. However, Invesco CurrencyShares is 15.53 times more volatile than iShares Floating Rate. It trades about 0.12 of its potential returns per unit of risk. iShares Floating Rate is currently generating about 0.56 per unit of risk. If you would invest  5,881  in Invesco CurrencyShares Japanese on December 29, 2024 and sell it today you would earn a total of  223.00  from holding Invesco CurrencyShares Japanese or generate 3.79% return on investment over 90 days.

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

Invesco CurrencyShares Japanes  vs.  iShares Floating Rate

Invesco CurrencyShares

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco CurrencyShares Japanese are ranked lower than 9 (%) 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 latest stock price disturbance, may contribute to short-term losses for the investors.

iShares Floating Rate

Risk-Adjusted Performance

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Floating Rate are ranked lower than 43 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, IShares Floating is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Invesco CurrencyShares and IShares Floating

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

The idea behind Invesco CurrencyShares Japanese and iShares Floating Rate 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.