Correlation Between Invesco FTSE and Global X
Can any of the company-specific risk be diversified away by investing in both Invesco FTSE 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 FTSE 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 FTSE RAFI and Global X MSCI, you can compare the effects of market volatilities on Invesco FTSE 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 FTSE with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco FTSE and Global X.
Diversification Opportunities for Invesco FTSE and Global X
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Invesco and Global is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Invesco FTSE RAFI and Global X MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X MSCI and Invesco FTSE 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 FTSE RAFI 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 MSCI has no effect on the direction of Invesco FTSE i.e., Invesco FTSE and Global X go up and down completely randomly.
Pair Corralation between Invesco FTSE and Global X
Considering the 90-day investment horizon Invesco FTSE RAFI is expected to generate 1.21 times more return on investment than Global X. However, Invesco FTSE is 1.21 times more volatile than Global X MSCI. It trades about 0.05 of its potential returns per unit of risk. Global X MSCI is currently generating about 0.05 per unit of risk. If you would invest 1,640 in Invesco FTSE RAFI on September 14, 2024 and sell it today you would earn a total of 472.00 from holding Invesco FTSE RAFI or generate 28.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Invesco FTSE RAFI vs. Global X MSCI
Performance |
| Timeline |
| Invesco FTSE RAFI |
| Global X MSCI |
Invesco FTSE and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco FTSE and Global X
The main advantage of trading using opposite Invesco FTSE and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco FTSE 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 FTSE vs. Global X MSCI | Invesco FTSE vs. Global X Alternative | Invesco FTSE vs. iShares Emerging Markets | Invesco FTSE vs. Global X SuperDividend |
| Global X vs. Global X MSCI | Global X vs. Global X Alternative | Global X vs. First Trust Intl | Global X vs. iShares AsiaPacific Dividend |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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