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 Autonomous 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

0.77

Correlation Coefficient

Global X  Invesco Solar

Poor diversification

The 3 months correlation between Global and Invesco is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Global X Autonomous 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 Autonomous 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 Autonomous is expected to under-perform the Invesco Solar. But the etf apears to be less risky and, when comparing its historical volatility, Global X Autonomous is 1.33 times less risky than Invesco Solar. The etf trades about -0.08 of its potential returns per unit of risk. The Invesco Solar ETF is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  3,362  in Invesco Solar ETF on December 29, 2024 and sell it today you would lose (261.00) from holding Invesco Solar ETF or give up 7.76% of portfolio value over 90 days.

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

Global X Autonomous  vs.  Invesco Solar ETF

Global X Autonomous

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global X Autonomous has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Etf's forward indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated 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 latest unfluctuating performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains 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 Autonomous 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.