Correlation Between Invesco Global and Themes Airlines

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

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

Diversification Opportunities for Invesco Global and Themes Airlines

0.31

Correlation Coefficient

Invesco Global  Themes Airlines

Weak diversification

The 3 months correlation between Invesco and Themes is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Global Listed and Themes Airlines ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themes Airlines ETF and Invesco Global 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 Global Listed are associated (or correlated) with Themes Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themes Airlines ETF has no effect on the direction of Invesco Global i.e., Invesco Global and Themes Airlines go up and down completely randomly.

Pair Corralation between Invesco Global and Themes Airlines

Considering the 90-day investment horizon Invesco Global is expected to generate 5.59 times less return on investment than Themes Airlines. In addition to that, Invesco Global is 1.09 times more volatile than Themes Airlines ETF. It trades about 0.03 of its total potential returns per unit of risk. Themes Airlines ETF is currently generating about 0.16 per unit of volatility. If you would invest  2,712  in Themes Airlines ETF on October 20, 2024 and sell it today you would earn a total of  277.00  from holding Themes Airlines ETF or generate 10.21% return on investment over 90 days.

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

Invesco Global Listed  vs.  Themes Airlines ETF

Invesco Global Listed

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Global Listed are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Invesco Global is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Themes Airlines ETF

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Themes Airlines ETF are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal basic indicators, Themes Airlines may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Invesco Global and Themes Airlines

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

The idea behind Invesco Global Listed and Themes Airlines ETF 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.

Check out your portfolio center.

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.