Correlation Between Invesco 1 and Global X
Can any of the company-specific risk be diversified away by investing in both Invesco 1 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 1 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 1 5 Year and Global X Active, you can compare the effects of market volatilities on Invesco 1 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 1 with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco 1 and Global X.
Diversification Opportunities for Invesco 1 and Global X
Poor diversification
The 3 months correlation between Invesco and Global is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Invesco 1 5 Year and Global X Active in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Active and Invesco 1 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 1 5 Year 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 Active has no effect on the direction of Invesco 1 i.e., Invesco 1 and Global X go up and down completely randomly.
Pair Corralation between Invesco 1 and Global X
Assuming the 90 days trading horizon Invesco 1 5 Year is expected to under-perform the Global X. In addition to that, Invesco 1 is 1.52 times more volatile than Global X Active. It trades about -0.07 of its total potential returns per unit of risk. Global X Active is currently generating about 0.12 per unit of volatility. If you would invest 1,002 in Global X Active on August 25, 2024 and sell it today you would earn a total of 3.00 from holding Global X Active or generate 0.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco 1 5 Year vs. Global X Active
Performance |
| Timeline |
| Invesco 1 5 |
| Global X Active |
Invesco 1 and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco 1 and Global X
The main advantage of trading using opposite Invesco 1 and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco 1 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 1 vs. Mackenzie Canadian Aggregate | Invesco 1 vs. Mackenzie Canadian Short | Invesco 1 vs. Mackenzie Core Plus | Invesco 1 vs. Mackenzie Investment Grade |
| Global X vs. Mackenzie Canadian Aggregate | Global X vs. Mackenzie Canadian Short | Global X vs. Mackenzie Core Plus | Global X vs. Mackenzie Investment Grade |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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