Correlation Between Invesco SP and Global X

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

Diversification Opportunities for Invesco SP and Global X

-0.55

Correlation Coefficient

Invesco SP  Global X

Excellent diversification

The 3 months correlation between Invesco and Global is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Invesco SP Ultra and Global X MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X MSCI and Invesco SP 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 SP Ultra 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 MSCI has no effect on the direction of Invesco SP i.e., Invesco SP and Global X go up and down completely randomly.

Pair Corralation between Invesco SP and Global X

Given the investment horizon of 90 days Invesco SP Ultra is expected to under-perform the Global X. But the etf apears to be less risky and, when comparing its historical volatility, Invesco SP Ultra is 1.18 times less risky than Global X. The etf trades about -0.32 of its potential returns per unit of risk. The Global X MSCI is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,408  in Global X MSCI on September 20, 2024 and sell it today you would earn a total of  15.00  from holding Global X MSCI or generate 0.62% return on investment over 90 days.

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

Invesco SP Ultra  vs.  Global X MSCI

Invesco SP Ultra

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco SP Ultra has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, Invesco SP is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Global X MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Global X is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Invesco SP and Global X

The main advantage of trading using opposite Invesco SP and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco SP 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 SP Ultra and Global X MSCI 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.