Correlation Between Invesco Dividend and Global X

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

Diversification Opportunities for Invesco Dividend and Global X

0.05

Correlation Coefficient

Invesco Dividend  Global X

Significant diversification

The 3 months correlation between Invesco and Global is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Dividend Achievers and Global X SuperDividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X SuperDividend and Invesco Dividend 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 Dividend Achievers 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 SuperDividend has no effect on the direction of Invesco Dividend i.e., Invesco Dividend and Global X go up and down completely randomly.

Pair Corralation between Invesco Dividend and Global X

Considering the 90-day investment horizon Invesco Dividend Achievers is expected to under-perform the Global X. But the etf apears to be less risky and, when comparing its historical volatility, Invesco Dividend Achievers is 1.14 times less risky than Global X. The etf trades about -0.22 of its potential returns per unit of risk. The Global X SuperDividend is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  2,124  in Global X SuperDividend on October 6, 2024 and sell it today you would lose (41.00) from holding Global X SuperDividend or give up 1.93% of portfolio value over 90 days.

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

Invesco Dividend Achievers  vs.  Global X SuperDividend

Invesco Dividend Ach

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Dividend Achievers are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Invesco Dividend is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Global X SuperDividend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X SuperDividend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Etf's forward indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

Pair Trading with Invesco Dividend and Global X

The main advantage of trading using opposite Invesco Dividend and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Dividend 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 Dividend Achievers and Global X SuperDividend 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.