Correlation Between Global X and Invesco SPTSX
Can any of the company-specific risk be diversified away by investing in both Global X and Invesco SPTSX 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 SPTSX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X SPTSX and Invesco SPTSX Composite, you can compare the effects of market volatilities on Global X and Invesco SPTSX 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 SPTSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Invesco SPTSX.
Diversification Opportunities for Global X and Invesco SPTSX
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Invesco is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Global X SPTSX and Invesco SPTSX Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SPTSX Composite 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 SPTSX are associated (or correlated) with Invesco SPTSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SPTSX Composite has no effect on the direction of Global X i.e., Global X and Invesco SPTSX go up and down completely randomly.
Pair Corralation between Global X and Invesco SPTSX
Assuming the 90 days trading horizon Global X SPTSX is expected to generate 1.15 times more return on investment than Invesco SPTSX. However, Global X is 1.15 times more volatile than Invesco SPTSX Composite. It trades about 0.09 of its potential returns per unit of risk. Invesco SPTSX Composite is currently generating about 0.07 per unit of risk. If you would invest 5,112 in Global X SPTSX on November 2, 2024 and sell it today you would earn a total of 1,683 from holding Global X SPTSX or generate 32.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X SPTSX vs. Invesco SPTSX Composite
Performance |
| Timeline |
| Global X SPTSX |
| Invesco SPTSX Composite |
Global X and Invesco SPTSX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Invesco SPTSX
The main advantage of trading using opposite Global X and Invesco SPTSX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Invesco SPTSX 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 SPTSX will offset losses from the drop in Invesco SPTSX's long position.| Global X vs. Global X SP | Global X vs. BMO SPTSX Capped | Global X vs. Vanguard FTSE Canada | Global X vs. iShares Core SPTSX |
| Invesco SPTSX vs. iShares MSCI Canada | Invesco SPTSX vs. Invesco FTSE RAFI | Invesco SPTSX vs. Invesco 1 5 Year | Invesco SPTSX vs. Invesco SP 500 |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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