Correlation Between Invesco CurrencyShares and 6 Meridian

Can any of the company-specific risk be diversified away by investing in both Invesco CurrencyShares and 6 Meridian 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 6 Meridian 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 6 Meridian Mega, you can compare the effects of market volatilities on Invesco CurrencyShares and 6 Meridian 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 6 Meridian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco CurrencyShares and 6 Meridian.

Diversification Opportunities for Invesco CurrencyShares and 6 Meridian

-0.7

Correlation Coefficient

Invesco CurrencyShares  6 Meridian

Excellent diversification

The 3 months correlation between Invesco and SIXA is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Invesco CurrencyShares Japanes and 6 Meridian Mega in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 6 Meridian Mega 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 6 Meridian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 6 Meridian Mega has no effect on the direction of Invesco CurrencyShares i.e., Invesco CurrencyShares and 6 Meridian go up and down completely randomly.

Pair Corralation between Invesco CurrencyShares and 6 Meridian

Considering the 90-day investment horizon Invesco CurrencyShares Japanese is expected to under-perform the 6 Meridian. In addition to that, Invesco CurrencyShares is 1.39 times more volatile than 6 Meridian Mega. It trades about -0.16 of its total potential returns per unit of risk. 6 Meridian Mega is currently generating about 0.13 per unit of volatility. If you would invest  4,391  in 6 Meridian Mega on September 12, 2024 and sell it today you would earn a total of  189.00  from holding 6 Meridian Mega or generate 4.3% return on investment over 90 days.

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

Invesco CurrencyShares Japanes  vs.  6 Meridian Mega

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 weak 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.

6 Meridian Mega

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 6 Meridian Mega are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 6 Meridian is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Invesco CurrencyShares and 6 Meridian

The main advantage of trading using opposite Invesco CurrencyShares and 6 Meridian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco CurrencyShares position performs unexpectedly, 6 Meridian 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 6 Meridian will offset losses from the drop in 6 Meridian's long position.

The idea behind Invesco CurrencyShares Japanese and 6 Meridian Mega 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.