Correlation Between US Global and Invesco Solar

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

By analyzing existing cross correlation between US Global Jets and Invesco Solar ETF, you can compare the effects of market volatilities on US Global 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 US Global with a short position of Invesco Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Global and Invesco Solar.

Diversification Opportunities for US Global and Invesco Solar

0.64

Correlation Coefficient

US Global  Invesco Solar

Poor diversification

The 3 months correlation between JETS and Invesco is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding US Global Jets 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 US Global 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 US Global Jets 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 US Global i.e., US Global and Invesco Solar go up and down completely randomly.

Pair Corralation between US Global and Invesco Solar

Given the investment horizon of 90 days US Global Jets is expected to under-perform the Invesco Solar. But the etf apears to be less risky and, when comparing its historical volatility, US Global Jets is 1.14 times less risky than Invesco Solar. The etf trades about -0.14 of its potential returns per unit of risk. The Invesco Solar ETF is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  3,362  in Invesco Solar ETF on December 28, 2024 and sell it today you would lose (235.00) from holding Invesco Solar ETF or give up 6.99% of portfolio value over 90 days.

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

US Global Jets  vs.  Invesco Solar ETF

US Global Jets

Risk-Adjusted Performance

Very Weak

Over the last 90 days US Global Jets 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 comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private 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 US Global and Invesco Solar

The main advantage of trading using opposite US Global and Invesco Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Global 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 US Global Jets 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..