Correlation Between Invesco Treasury and WisdomTree Wheat

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

By analyzing existing cross correlation between Invesco Treasury Bond and WisdomTree Wheat 2x, you can compare the effects of market volatilities on Invesco Treasury and WisdomTree Wheat 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 Treasury with a short position of WisdomTree Wheat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Treasury and WisdomTree Wheat.

Diversification Opportunities for Invesco Treasury and WisdomTree Wheat

-0.59

Correlation Coefficient

Invesco Treasury  WisdomTree Wheat

Excellent diversification

The 3 months correlation between Invesco and WisdomTree is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Treasury Bond and WisdomTree Wheat 2x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Wheat and Invesco Treasury 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 Treasury Bond are associated (or correlated) with WisdomTree Wheat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Wheat has no effect on the direction of Invesco Treasury i.e., Invesco Treasury and WisdomTree Wheat go up and down completely randomly.

Pair Corralation between Invesco Treasury and WisdomTree Wheat

Assuming the 90 days trading horizon Invesco Treasury Bond is expected to generate 0.16 times more return on investment than WisdomTree Wheat. However, Invesco Treasury Bond is 6.16 times less risky than WisdomTree Wheat. It trades about 0.02 of its potential returns per unit of risk. WisdomTree Wheat 2x is currently generating about -0.08 per unit of risk. If you would invest  3,317  in Invesco Treasury Bond on September 23, 2024 and sell it today you would earn a total of  20.00  from holding Invesco Treasury Bond or generate 0.6% return on investment over 90 days.

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

Invesco Treasury Bond  vs.  WisdomTree Wheat 2x

Invesco Treasury Bond

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Treasury Bond are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Invesco Treasury is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

WisdomTree Wheat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WisdomTree Wheat 2x has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Etf's forward-looking indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Pair Trading with Invesco Treasury and WisdomTree Wheat

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

The idea behind Invesco Treasury Bond and WisdomTree Wheat 2x 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.