Correlation Between Invesco Treasury and Deka Deutsche

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

Diversification Opportunities for Invesco Treasury and Deka Deutsche

0.86

Correlation Coefficient

Invesco Treasury  Deka Deutsche

Very poor diversification

The 3 months correlation between Invesco and Deka is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Treasury Bond and Deka Deutsche Brse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deka Deutsche Brse 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 Deka Deutsche. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deka Deutsche Brse has no effect on the direction of Invesco Treasury i.e., Invesco Treasury and Deka Deutsche go up and down completely randomly.

Pair Corralation between Invesco Treasury and Deka Deutsche

Assuming the 90 days trading horizon Invesco Treasury Bond is expected to under-perform the Deka Deutsche. But the etf apears to be less risky and, when comparing its historical volatility, Invesco Treasury Bond is 1.54 times less risky than Deka Deutsche. The etf trades about -0.01 of its potential returns per unit of risk. The Deka Deutsche Brse is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  10,846  in Deka Deutsche Brse on September 24, 2024 and sell it today you would earn a total of  237.00  from holding Deka Deutsche Brse or generate 2.19% return on investment over 90 days.

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

Invesco Treasury Bond  vs.  Deka Deutsche Brse

Invesco Treasury Bond

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Treasury Bond are ranked lower than 3 (%) 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.

Deka Deutsche Brse

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deka Deutsche Brse has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Deka Deutsche is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Invesco Treasury and Deka Deutsche

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

The idea behind Invesco Treasury Bond and Deka Deutsche Brse 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.