Correlation Between Global X and Invesco Emerging
Can any of the company-specific risk be diversified away by investing in both Global X and Invesco Emerging 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 Global X and Invesco Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Emerging and Invesco Emerging Markets, you can compare the effects of market volatilities on Global X and Invesco Emerging 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 Global X with a short position of Invesco Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Invesco Emerging.
Diversification Opportunities for Global X and Invesco Emerging
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and Invesco is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Global X Emerging and Invesco Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Emerging Markets and Global X 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 Global X Emerging are associated (or correlated) with Invesco Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Emerging Markets has no effect on the direction of Global X i.e., Global X and Invesco Emerging go up and down completely randomly.
Pair Corralation between Global X and Invesco Emerging
Given the investment horizon of 90 days Global X is expected to generate 1.3 times less return on investment than Invesco Emerging. But when comparing it to its historical volatility, Global X Emerging is 1.4 times less risky than Invesco Emerging. It trades about 0.07 of its potential returns per unit of risk. Invesco Emerging Markets is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,678 in Invesco Emerging Markets on August 30, 2024 and sell it today you would earn a total of 391.00 from holding Invesco Emerging Markets or generate 23.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Emerging vs. Invesco Emerging Markets
Performance |
| Timeline |
| Global X Emerging |
| Invesco Emerging Markets |
Global X and Invesco Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Invesco Emerging
The main advantage of trading using opposite Global X and Invesco Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Invesco Emerging 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 Invesco Emerging will offset losses from the drop in Invesco Emerging's long position.| Global X vs. Global X Variable | Global X vs. Global X Alternative | Global X vs. Global X SP | Global X vs. Global X MSCI |
| Invesco Emerging vs. iShares JP Morgan | Invesco Emerging vs. SPDR Bloomberg International | Invesco Emerging vs. VanEck JP Morgan | Invesco Emerging vs. Invesco Fundamental High |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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