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 Robotics 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

0.21

Correlation Coefficient

Global X  Invesco Solar

Modest diversification

The 3 months correlation between Global and Invesco is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Global X Robotics 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 Robotics 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

Given the investment horizon of 90 days Global X Robotics is expected to generate 0.57 times more return on investment than Invesco Solar. However, Global X Robotics is 1.75 times less risky than Invesco Solar. It trades about 0.06 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  2,323  in Global X Robotics on December 2, 2024 and sell it today you would earn a total of  884.00  from holding Global X Robotics or generate 38.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Global X Robotics  vs.  Invesco Solar ETF

Global X Robotics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global X Robotics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Global X is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Invesco Solar ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco Solar ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

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.

The idea behind Global X Robotics and Invesco Solar ETF pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.