Correlation Between Invesco Global and Global X

Can any of the company-specific risk be diversified away by investing in both Invesco Global 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 Global 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 Global Clean and Global X Uranium, you can compare the effects of market volatilities on Invesco Global 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 Global with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Global and Global X.

Diversification Opportunities for Invesco Global and Global X

-0.31

Correlation Coefficient

Invesco Global  Global X

Very good diversification

The 3 months correlation between Invesco and Global is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Global Clean and Global X Uranium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Uranium and Invesco 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 Invesco Global Clean 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 Uranium has no effect on the direction of Invesco Global i.e., Invesco Global and Global X go up and down completely randomly.

Pair Corralation between Invesco Global and Global X

Considering the 90-day investment horizon Invesco Global Clean is expected to under-perform the Global X. But the etf apears to be less risky and, when comparing its historical volatility, Invesco Global Clean is 1.32 times less risky than Global X. The etf trades about -0.02 of its potential returns per unit of risk. The Global X Uranium is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,411  in Global X Uranium on September 5, 2024 and sell it today you would earn a total of  778.00  from holding Global X Uranium or generate 32.27% return on investment over 90 days.

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

Invesco Global Clean  vs.  Global X Uranium

Invesco Global Clean

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Global Clean has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Invesco Global is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Global X Uranium

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Uranium are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Global X sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Invesco Global and Global X

The main advantage of trading using opposite Invesco Global and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Global 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 Global Clean and Global X Uranium 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.