Correlation Between Global X and Invesco SP
Can any of the company-specific risk be diversified away by investing in both Global X and Invesco SP 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 SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Funds and Invesco SP Emerging, you can compare the effects of market volatilities on Global X and Invesco SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Invesco SP.
Diversification Opportunities for Global X and Invesco SP
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Invesco is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds and Invesco SP Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP Emerging 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 Funds are associated (or correlated) with Invesco SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP Emerging has no effect on the direction of Global X i.e., Global X and Invesco SP go up and down completely randomly.
Pair Corralation between Global X and Invesco SP
Considering the 90-day investment horizon Global X Funds is expected to under-perform the Invesco SP. In addition to that, Global X is 1.23 times more volatile than Invesco SP Emerging. It trades about -0.23 of its total potential returns per unit of risk. Invesco SP Emerging is currently generating about -0.18 per unit of volatility. If you would invest 2,516 in Invesco SP Emerging on August 28, 2024 and sell it today you would lose (64.00) from holding Invesco SP Emerging or give up 2.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Funds vs. Invesco SP Emerging
Performance |
| Timeline |
| Global X Funds |
| Invesco SP Emerging |
Global X and Invesco SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Invesco SP
The main advantage of trading using opposite Global X and Invesco SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Invesco SP 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 SP will offset losses from the drop in Invesco SP's long position.| Global X vs. Invesco PureBeta MSCI | Global X vs. Aquagold International | Global X vs. Morningstar Unconstrained Allocation | Global X vs. High Yield Municipal Fund |
| Invesco SP vs. Invesco PureBeta MSCI | Invesco SP vs. Aquagold International | Invesco SP vs. Morningstar Unconstrained Allocation | Invesco SP vs. High Yield Municipal Fund |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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