Correlation Between Global X and Invesco Solar
Can any of the company-specific risk be diversified away by investing in both Global X and Invesco Solar 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 Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Lithium and Invesco Solar ETF, you can compare the effects of market volatilities on Global X and Invesco Solar 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 Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Invesco Solar.
Diversification Opportunities for Global X and Invesco Solar
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Global and Invesco is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Global X Lithium and Invesco Solar ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Solar ETF 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 Lithium are associated (or correlated) with Invesco Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Solar ETF has no effect on the direction of Global X i.e., Global X and Invesco Solar go up and down completely randomly.
Pair Corralation between Global X and Invesco Solar
Considering the 90-day investment horizon Global X Lithium is expected to generate 0.78 times more return on investment than Invesco Solar. However, Global X Lithium is 1.29 times less risky than Invesco Solar. It trades about -0.05 of its potential returns per unit of risk. Invesco Solar ETF is currently generating about -0.06 per unit of risk. If you would invest 6,396 in Global X Lithium on October 22, 2024 and sell it today you would lose (2,168) from holding Global X Lithium or give up 33.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Lithium vs. Invesco Solar ETF
Performance |
| Timeline |
| Global X Lithium |
| Invesco Solar ETF |
Global X and Invesco Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Invesco Solar
The main advantage of trading using opposite Global X and Invesco Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Invesco Solar 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 Solar will offset losses from the drop in Invesco Solar's long position.| Global X vs. Invesco Solar ETF | Global X vs. Albemarle Corp | Global X vs. Lithium Americas Corp | Global X vs. iShares Global Clean |
| Invesco Solar vs. iShares Global Clean | Invesco Solar vs. Invesco WilderHill Clean | Invesco Solar vs. First Trust NASDAQ | Invesco Solar vs. Global X Lithium |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |