Correlation Between Global X and Invesco Nasdaq
Can any of the company-specific risk be diversified away by investing in both Global X and Invesco Nasdaq 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 Nasdaq into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Thematic and Invesco Nasdaq Biotechnology, you can compare the effects of market volatilities on Global X and Invesco Nasdaq 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 Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Invesco Nasdaq.
Diversification Opportunities for Global X and Invesco Nasdaq
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Invesco is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Global X Thematic and Invesco Nasdaq Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Nasdaq Biote 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 Thematic are associated (or correlated) with Invesco Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Nasdaq Biote has no effect on the direction of Global X i.e., Global X and Invesco Nasdaq go up and down completely randomly.
Pair Corralation between Global X and Invesco Nasdaq
Given the investment horizon of 90 days Global X is expected to generate 1.95 times less return on investment than Invesco Nasdaq. In addition to that, Global X is 1.28 times more volatile than Invesco Nasdaq Biotechnology. It trades about 0.01 of its total potential returns per unit of risk. Invesco Nasdaq Biotechnology is currently generating about 0.03 per unit of volatility. If you would invest 2,007 in Invesco Nasdaq Biotechnology on November 19, 2024 and sell it today you would earn a total of 250.90 from holding Invesco Nasdaq Biotechnology or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Thematic vs. Invesco Nasdaq Biotechnology
Performance |
| Timeline |
| Global X Thematic |
| Invesco Nasdaq Biote |
Global X and Invesco Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Invesco Nasdaq
The main advantage of trading using opposite Global X and Invesco Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Invesco Nasdaq 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 Nasdaq will offset losses from the drop in Invesco Nasdaq's long position.The idea behind Global X Thematic and Invesco Nasdaq Biotechnology 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.| Invesco Nasdaq vs. Invesco PHLX Semiconductor | Invesco Nasdaq vs. iShares Genomics Immunology | Invesco Nasdaq vs. First Trust Nasdaq | Invesco Nasdaq vs. Global X Genomics |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |