Correlation Between Invesco KBW and Global X

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

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

Diversification Opportunities for Invesco KBW and Global X

0.77

Correlation Coefficient

Invesco KBW  Global X

Poor diversification

The 3 months correlation between Invesco and Global is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Invesco KBW Premium and Global X SuperDividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X SuperDividend and Invesco KBW 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 Invesco KBW Premium are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X SuperDividend has no effect on the direction of Invesco KBW i.e., Invesco KBW and Global X go up and down completely randomly.

Pair Corralation between Invesco KBW and Global X

Given the investment horizon of 90 days Invesco KBW Premium is expected to under-perform the Global X. In addition to that, Invesco KBW is 1.2 times more volatile than Global X SuperDividend. It trades about -0.02 of its total potential returns per unit of risk. Global X SuperDividend is currently generating about 0.03 per unit of volatility. If you would invest  2,120  in Global X SuperDividend on September 16, 2024 and sell it today you would earn a total of  6.00  from holding Global X SuperDividend or generate 0.28% return on investment over 90 days.

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

Invesco KBW Premium  vs.  Global X SuperDividend

Invesco KBW Premium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco KBW Premium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Global X SuperDividend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X SuperDividend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, Global X is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Invesco KBW and Global X

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

The idea behind Invesco KBW Premium and Global X SuperDividend 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.