Forex is developed to access and analyze currency data from Onada database. The ultimate goal is to provide tools for the users to create portfolios that meet their risk appetite. This article describes how to use this app to visualize historical data, return, correlation and finally create optimum investment portfolio.

Under ‘Select Currency’, write desired currency names and click the item to enter into this multiple selection. Once currency symbols are entered, click ‘Submit’. This will plot multiple currencies in ‘Plot’ window.

Hoover mouse over the plot to see individual data point i.e. date and price of the currency. Select start and end dates under ‘Select Date’. By default ‘end date’ is the last date when ‘adjusted closing value’ is available. Only 6 months currency data is available.

Next, we will see the historical daily return of the currency in histogram. Under ‘Select Plot Type’, check ‘Daily Return’.

Now, we will find how currencies are distributed in risk-return space. Check ‘Risk Vs Return’ under ‘Select Plot Type’. X-Axis of this plot is the standard deviation of the selected data and Y-Axis is the average return. Both axis values are converted into dollar amounts per $1000 investment. For example, AUD generates $0.2 average return everyday at $3.25 standard deviation per $1000 investment for the time period selected. This provides a practical idea of risk and return when investing in a single currency. This information can be used later to compare the risk-return of portfolios. Change investment amount in ‘Enter Investment Amount’ as you want.

Correlation of returns is one of the most valuable information in selecting currency. It varies between -1 to +1 where -1 being perfect negative correlation, 0 being no correlation and +1 being perfect positive correlatoin. We do not want all positively correlated currency in our portfolio. This will increase or decrease return simultaneously. Rather we want to select currency that are not correlated or, even better, negatively correlated so that loss of one will be compensated by the others. To see the correlation of the selected commodities for the specified time, check ‘Return Correlation’ under ‘Select Plot Type’.

Each block in this image represents the correlation of two currencies in X and Y-Axis.

Selecting ‘Construct Portfolio’ under ‘Select Plot Type’ will create numerous portfolios. Hoover mouse over each point to see asset allocation, risk and return.

For example, the portfolio in image shows asset allocation of 5% AUD, 6.8% JPY, 29.2% CAD, 11.2% CHF, 41% EUR and 6.8% GBP. This will generate on average $0.26 daily return.

To further adjust generated portfolios, use the slider bar under ‘Plot’ window. ‘Minimum Asset % Weight’ is the the minimum percentage allocation of each asset.

Use Currency app to generate your own investment portfolio.