Correlation Between Invesco CurrencyShares and Strategy Shares

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

Diversification Opportunities for Invesco CurrencyShares and Strategy Shares

0.67

Correlation Coefficient

Invesco CurrencyShares  Strategy Shares

Poor diversification

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

Pair Corralation between Invesco CurrencyShares and Strategy Shares

Considering the 90-day investment horizon Invesco CurrencyShares Japanese is expected to generate 1.38 times more return on investment than Strategy Shares. However, Invesco CurrencyShares is 1.38 times more volatile than Strategy Shares Nasdaq. It trades about 0.22 of its potential returns per unit of risk. Strategy Shares Nasdaq is currently generating about 0.3 per unit of risk. If you would invest  6,279  in Invesco CurrencyShares Japanese on June 9, 2024 and sell it today you would earn a total of  210.00  from holding Invesco CurrencyShares Japanese or generate 3.34% return on investment over 90 days.

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

Invesco CurrencyShares Japanes  vs.  Strategy Shares Nasdaq

Invesco CurrencyShares

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco CurrencyShares Japanese are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Invesco CurrencyShares may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Strategy Shares Nasdaq

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Strategy Shares Nasdaq are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Strategy Shares is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Invesco CurrencyShares and Strategy Shares

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

The idea behind Invesco CurrencyShares Japanese and Strategy Shares Nasdaq 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.