Correlation Between Global X and Invesco PHLX

Can any of the company-specific risk be diversified away by investing in both Global X and Invesco PHLX 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 PHLX into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global X Genomics and Invesco PHLX Semiconductor, you can compare the effects of market volatilities on Global X and Invesco PHLX 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 PHLX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Invesco PHLX.

Diversification Opportunities for Global X and Invesco PHLX

0.48

Correlation Coefficient

Global X  Invesco PHLX

Very weak diversification

The 3 months correlation between Global and Invesco is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Global X Genomics and Invesco PHLX Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco PHLX Semicon 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 Genomics are associated (or correlated) with Invesco PHLX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco PHLX Semicon has no effect on the direction of Global X i.e., Global X and Invesco PHLX go up and down completely randomly.

Pair Corralation between Global X and Invesco PHLX

Given the investment horizon of 90 days Global X Genomics is expected to under-perform the Invesco PHLX. But the etf apears to be less risky and, when comparing its historical volatility, Global X Genomics is 1.25 times less risky than Invesco PHLX. The etf trades about -0.18 of its potential returns per unit of risk. The Invesco PHLX Semiconductor is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  3,947  in Invesco PHLX Semiconductor on October 9, 2024 and sell it today you would earn a total of  234.00  from holding Invesco PHLX Semiconductor or generate 5.93% return on investment over 90 days.

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

Global X Genomics  vs.  Invesco PHLX Semiconductor

Global X Genomics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Invesco PHLX Semicon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco PHLX Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Invesco PHLX is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Global X and Invesco PHLX

The main advantage of trading using opposite Global X and Invesco PHLX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Invesco PHLX 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 PHLX will offset losses from the drop in Invesco PHLX's long position.

The idea behind Global X Genomics and Invesco PHLX Semiconductor 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.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .