Correlation Between Invesco Dynamic and Global X

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

Diversification Opportunities for Invesco Dynamic and Global X

0.95

Correlation Coefficient

Invesco Dynamic  Global X

Almost no diversification

The 3 months correlation between Invesco and Global is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Dynamic Leisure and Global X Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Infrastructure and Invesco Dynamic 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 Dynamic Leisure 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 Infrastructure has no effect on the direction of Invesco Dynamic i.e., Invesco Dynamic and Global X go up and down completely randomly.

Pair Corralation between Invesco Dynamic and Global X

Considering the 90-day investment horizon Invesco Dynamic Leisure is expected to generate 0.8 times more return on investment than Global X. However, Invesco Dynamic Leisure is 1.25 times less risky than Global X. It trades about 0.27 of its potential returns per unit of risk. Global X Infrastructure is currently generating about 0.16 per unit of risk. If you would invest  4,611  in Invesco Dynamic Leisure on September 13, 2024 and sell it today you would earn a total of  819.00  from holding Invesco Dynamic Leisure or generate 17.76% return on investment over 90 days.

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

Invesco Dynamic Leisure  vs.  Global X Infrastructure

Invesco Dynamic Leisure

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Dynamic Leisure are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Invesco Dynamic revealed solid returns over the last few months and may actually be approaching a breakup point.

Global X Infrastructure

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Infrastructure are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Global X exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Invesco Dynamic and Global X

The main advantage of trading using opposite Invesco Dynamic and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Dynamic 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 Dynamic Leisure and Global X Infrastructure 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.