Correlation Between Invesco Fundamental and Global X

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

Diversification Opportunities for Invesco Fundamental and Global X

0.83

Correlation Coefficient

Invesco Fundamental  Global X

Very poor diversification

The 3 months correlation between Invesco and Global is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Fundamental High and Global X Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Emerging and Invesco Fundamental 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 Fundamental High 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 Emerging has no effect on the direction of Invesco Fundamental i.e., Invesco Fundamental and Global X go up and down completely randomly.

Pair Corralation between Invesco Fundamental and Global X

Considering the 90-day investment horizon Invesco Fundamental is expected to generate 1.13 times less return on investment than Global X. But when comparing it to its historical volatility, Invesco Fundamental High is 1.62 times less risky than Global X. It trades about 0.12 of its potential returns per unit of risk. Global X Emerging is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,024  in Global X Emerging on September 12, 2024 and sell it today you would earn a total of  303.00  from holding Global X Emerging or generate 14.97% return on investment over 90 days.

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

Invesco Fundamental High  vs.  Global X Emerging

Invesco Fundamental High

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Fundamental High are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical indicators, Invesco Fundamental is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Global X Emerging

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Emerging are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Global X is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Invesco Fundamental and Global X

The main advantage of trading using opposite Invesco Fundamental and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Fundamental 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 Fundamental High and Global X Emerging 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.