Correlation Between Global X and Invesco Equal

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

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

Diversification Opportunities for Global X and Invesco Equal

0.98

Correlation Coefficient

Global X  Invesco Equal

Almost no diversification

The 3 months correlation between Global and Invesco is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds and Invesco Equal Weight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Equal Weight 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 Funds are associated (or correlated) with Invesco Equal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Equal Weight has no effect on the direction of Global X i.e., Global X and Invesco Equal go up and down completely randomly.

Pair Corralation between Global X and Invesco Equal

Given the investment horizon of 90 days Global X is expected to generate 1.16 times less return on investment than Invesco Equal. But when comparing it to its historical volatility, Global X Funds is 1.81 times less risky than Invesco Equal. It trades about 0.16 of its potential returns per unit of risk. Invesco Equal Weight is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,684  in Invesco Equal Weight on December 28, 2024 and sell it today you would earn a total of  82.00  from holding Invesco Equal Weight or generate 3.06% return on investment over 90 days.

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

Global X Funds  vs.  Invesco Equal Weight

Global X Funds

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Global X is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Invesco Equal Weight

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Equal Weight are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Invesco Equal is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Global X and Invesco Equal

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

The idea behind Global X Funds and Invesco Equal Weight 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.