Correlation Between Invesco NASDAQ and Global X
Can any of the company-specific risk be diversified away by investing in both Invesco NASDAQ and Global X 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 Invesco NASDAQ and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco NASDAQ Internet and Global X FinTech, you can compare the effects of market volatilities on Invesco NASDAQ and Global X 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 Invesco NASDAQ with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco NASDAQ and Global X.
Diversification Opportunities for Invesco NASDAQ and Global X
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and Global is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Invesco NASDAQ Internet and Global X FinTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X FinTech and Invesco NASDAQ 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 Invesco NASDAQ Internet are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X FinTech has no effect on the direction of Invesco NASDAQ i.e., Invesco NASDAQ and Global X go up and down completely randomly.
Pair Corralation between Invesco NASDAQ and Global X
Given the investment horizon of 90 days Invesco NASDAQ is expected to generate 2.16 times less return on investment than Global X. But when comparing it to its historical volatility, Invesco NASDAQ Internet is 1.6 times less risky than Global X. It trades about 0.31 of its potential returns per unit of risk. Global X FinTech is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 2,942 in Global X FinTech on August 30, 2024 and sell it today you would earn a total of 441.00 from holding Global X FinTech or generate 14.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco NASDAQ Internet vs. Global X FinTech
Performance |
| Timeline |
| Invesco NASDAQ Internet |
| Global X FinTech |
Invesco NASDAQ and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco NASDAQ and Global X
The main advantage of trading using opposite Invesco NASDAQ and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco NASDAQ position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| Invesco NASDAQ vs. First Trust Dow | Invesco NASDAQ vs. First Trust NASDAQ 100 Technology | Invesco NASDAQ vs. Global X Social | Invesco NASDAQ vs. Invesco SP SmallCap |
| Global X vs. Amplify ETF Trust | Global X vs. Global X Cloud | Global X vs. Global X Internet | Global X vs. First Trust Cloud |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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