Correlation Between Invesco Dynamic and ProShares Global

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

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

Diversification Opportunities for Invesco Dynamic and ProShares Global

0.26

Correlation Coefficient

Invesco Dynamic  ProShares Global

Modest diversification

The 3 months correlation between Invesco and ProShares is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Dynamic Building and ProShares Global Listed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Global Listed 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 Building are associated (or correlated) with ProShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Global Listed has no effect on the direction of Invesco Dynamic i.e., Invesco Dynamic and ProShares Global go up and down completely randomly.

Pair Corralation between Invesco Dynamic and ProShares Global

Considering the 90-day investment horizon Invesco Dynamic Building is expected to under-perform the ProShares Global. In addition to that, Invesco Dynamic is 2.14 times more volatile than ProShares Global Listed. It trades about -0.1 of its total potential returns per unit of risk. ProShares Global Listed is currently generating about -0.01 per unit of volatility. If you would invest  2,743  in ProShares Global Listed on December 29, 2024 and sell it today you would lose (18.00) from holding ProShares Global Listed or give up 0.66% of portfolio value over 90 days.

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

Invesco Dynamic Building  vs.  ProShares Global Listed

Invesco Dynamic Building

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco Dynamic Building has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Etf's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

ProShares Global Listed

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Invesco Dynamic and ProShares Global

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

The idea behind Invesco Dynamic Building and ProShares Global Listed 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.