Correlation Between Invesco CurrencyShares and IShares Morningstar

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

Diversification Opportunities for Invesco CurrencyShares and IShares Morningstar

-0.67

Correlation Coefficient

Invesco CurrencyShares  IShares Morningstar

Excellent diversification

The 3 months correlation between Invesco and IShares is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Invesco CurrencyShares Japanes and iShares Morningstar Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Morningstar 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 Morningstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Morningstar has no effect on the direction of Invesco CurrencyShares i.e., Invesco CurrencyShares and IShares Morningstar go up and down completely randomly.

Pair Corralation between Invesco CurrencyShares and IShares Morningstar

Considering the 90-day investment horizon Invesco CurrencyShares Japanese is expected to under-perform the IShares Morningstar. But the etf apears to be less risky and, when comparing its historical volatility, Invesco CurrencyShares Japanese is 1.58 times less risky than IShares Morningstar. The etf trades about -0.06 of its potential returns per unit of risk. The iShares Morningstar Growth is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  4,820  in iShares Morningstar Growth on September 24, 2024 and sell it today you would earn a total of  4,279  from holding iShares Morningstar Growth or generate 88.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.2%
Values	Daily Returns

Invesco CurrencyShares Japanes  vs.  iShares Morningstar Growth

Invesco CurrencyShares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco CurrencyShares Japanese has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

iShares Morningstar

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Morningstar Growth are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile forward-looking signals, IShares Morningstar may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Invesco CurrencyShares and IShares Morningstar

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

The idea behind Invesco CurrencyShares Japanese and iShares Morningstar Growth 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.