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 Semiconductors and Global X FinTech, 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

0.86

Correlation Coefficient

Invesco Dynamic  Global X

Very poor diversification

The 3 months correlation between Invesco and Global is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Dynamic Semiconductors and Global X FinTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X FinTech 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 Semiconductors 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 FinTech 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 Semiconductors is expected to under-perform the Global X. In addition to that, Invesco Dynamic is 1.59 times more volatile than Global X FinTech. It trades about -0.09 of its total potential returns per unit of risk. Global X FinTech is currently generating about -0.1 per unit of volatility. If you would invest  3,190  in Global X FinTech on December 21, 2024 and sell it today you would lose (315.00) from holding Global X FinTech or give up 9.87% of portfolio value over 90 days.

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

Invesco Dynamic Semiconductors  vs.  Global X FinTech

Invesco Dynamic Semi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco Dynamic Semiconductors has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the Etf traders.

Global X FinTech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global X FinTech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

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 Semiconductors and Global X FinTech 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.