Correlation Between Invesco DWA and US Global

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

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

Diversification Opportunities for Invesco DWA and US Global

0.47

Correlation Coefficient

Invesco DWA  US Global

Very weak diversification

The 3 months correlation between Invesco and JETS is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Invesco DWA Consumer and US Global Jets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Global Jets and Invesco DWA 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 DWA Consumer are associated (or correlated) with US Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Global Jets has no effect on the direction of Invesco DWA i.e., Invesco DWA and US Global go up and down completely randomly.

Pair Corralation between Invesco DWA and US Global

Considering the 90-day investment horizon Invesco DWA Consumer is expected to under-perform the US Global. But the etf apears to be less risky and, when comparing its historical volatility, Invesco DWA Consumer is 1.31 times less risky than US Global. The etf trades about -0.03 of its potential returns per unit of risk. The US Global Jets is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  2,080  in US Global Jets on September 26, 2024 and sell it today you would earn a total of  475.00  from holding US Global Jets or generate 22.84% return on investment over 90 days.

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

Invesco DWA Consumer  vs.  US Global Jets

Invesco DWA Consumer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco DWA Consumer has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Invesco DWA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

US Global Jets

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in US Global Jets are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, US Global unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Invesco DWA and US Global

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

The idea behind Invesco DWA Consumer and US Global Jets 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.