Correlation Between Global X and Invesco NASDAQ

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

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

Diversification Opportunities for Global X and Invesco NASDAQ

0.51

Correlation Coefficient

Global X  Invesco NASDAQ

Very weak diversification

The 3 months correlation between Global and Invesco is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Global X Infrastructure and Invesco NASDAQ Next in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco NASDAQ Next 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 Infrastructure are associated (or correlated) with Invesco NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco NASDAQ Next has no effect on the direction of Global X i.e., Global X and Invesco NASDAQ go up and down completely randomly.

Pair Corralation between Global X and Invesco NASDAQ

Given the investment horizon of 90 days Global X Infrastructure is expected to under-perform the Invesco NASDAQ. In addition to that, Global X is 1.22 times more volatile than Invesco NASDAQ Next. It trades about -0.09 of its total potential returns per unit of risk. Invesco NASDAQ Next is currently generating about 0.04 per unit of volatility. If you would invest  3,134  in Invesco NASDAQ Next on October 22, 2024 and sell it today you would earn a total of  44.00  from holding Invesco NASDAQ Next or generate 1.4% return on investment over 90 days.

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

Global X Infrastructure  vs.  Invesco NASDAQ Next

Global X Infrastructure

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Infrastructure are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Global X is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Invesco NASDAQ Next

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco NASDAQ Next are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady basic indicators, Invesco NASDAQ is not utilizing all of its potentials. The recent stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Global X and Invesco NASDAQ

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

The idea behind Global X Infrastructure and Invesco NASDAQ Next 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.