Correlation Between Global X and Invesco Variable
Can any of the company-specific risk be diversified away by investing in both Global X and Invesco Variable 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 Variable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X SuperIncome and Invesco Variable Rate, you can compare the effects of market volatilities on Global X and Invesco Variable 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 Variable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Invesco Variable.
Diversification Opportunities for Global X and Invesco Variable
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and Invesco is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Global X SuperIncome and Invesco Variable Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Variable Rate 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 SuperIncome are associated (or correlated) with Invesco Variable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Variable Rate has no effect on the direction of Global X i.e., Global X and Invesco Variable go up and down completely randomly.
Pair Corralation between Global X and Invesco Variable
Given the investment horizon of 90 days Global X is expected to generate 1.58 times less return on investment than Invesco Variable. In addition to that, Global X is 1.55 times more volatile than Invesco Variable Rate. It trades about 0.04 of its total potential returns per unit of risk. Invesco Variable Rate is currently generating about 0.09 per unit of volatility. If you would invest 1,986 in Invesco Variable Rate on August 29, 2024 and sell it today you would earn a total of 452.00 from holding Invesco Variable Rate or generate 22.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X SuperIncome vs. Invesco Variable Rate
Performance |
| Timeline |
| Global X SuperIncome |
| Invesco Variable Rate |
Global X and Invesco Variable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Invesco Variable
The main advantage of trading using opposite Global X and Invesco Variable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Invesco Variable 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 Variable will offset losses from the drop in Invesco Variable's long position.| Global X vs. ETF Series Solutions | Global X vs. Aquagold International | Global X vs. Morningstar Unconstrained Allocation | Global X vs. High Yield Municipal Fund |
| Invesco Variable vs. ETF Series Solutions | Invesco Variable vs. Aquagold International | Invesco Variable vs. Morningstar Unconstrained Allocation | Invesco Variable vs. High Yield Municipal Fund |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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