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 SP and Invesco NASDAQ 100, 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
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Global and Invesco is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Global X SP and Invesco NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco NASDAQ 100 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 SP 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 100 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
Assuming the 90 days trading horizon Global X SP is expected to generate 0.75 times more return on investment than Invesco NASDAQ. However, Global X SP is 1.33 times less risky than Invesco NASDAQ. It trades about 0.34 of its potential returns per unit of risk. Invesco NASDAQ 100 is currently generating about 0.25 per unit of risk. If you would invest 8,128 in Global X SP on September 1, 2024 and sell it today you would earn a total of 528.00 from holding Global X SP or generate 6.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Global X SP vs. Invesco NASDAQ 100
Performance |
| Timeline |
| Global X SP |
| Invesco NASDAQ 100 |
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.| Global X vs. BMO SP 500 | Global X vs. Vanguard SP 500 | Global X vs. iShares Core SP | Global X vs. BMO SP 500 |
| Invesco NASDAQ vs. BMO SP 500 | Invesco NASDAQ vs. Vanguard SP 500 | Invesco NASDAQ vs. Global X SP | Invesco NASDAQ vs. iShares Core SP |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| 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 |