Correlation Between Invesco China and Global X
Can any of the company-specific risk be diversified away by investing in both Invesco China and Global X 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 China and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco China Technology and Global X MSCI, you can compare the effects of market volatilities on Invesco China and Global X 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 China with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco China and Global X.
Diversification Opportunities for Invesco China and Global X
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and Global is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Invesco China Technology and Global X MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X MSCI and Invesco China 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 China Technology are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X MSCI has no effect on the direction of Invesco China i.e., Invesco China and Global X go up and down completely randomly.
Pair Corralation between Invesco China and Global X
Given the investment horizon of 90 days Invesco China Technology is expected to generate 1.07 times more return on investment than Global X. However, Invesco China is 1.07 times more volatile than Global X MSCI. It trades about 0.06 of its potential returns per unit of risk. Global X MSCI is currently generating about 0.03 per unit of risk. If you would invest 3,507 in Invesco China Technology on August 24, 2024 and sell it today you would earn a total of 557.00 from holding Invesco China Technology or generate 15.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco China Technology vs. Global X MSCI
Performance |
| Timeline |
| Invesco China Technology |
| Global X MSCI |
Invesco China and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco China and Global X
The main advantage of trading using opposite Invesco China and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco China position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| Invesco China vs. KraneShares CSI China | Invesco China vs. iShares MSCI China | Invesco China vs. Global X MSCI | Invesco China vs. Xtrackers Harvest CSI |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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