Correlation Between Invesco PHLX and Global X

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

Diversification Opportunities for Invesco PHLX and Global X

0.48

Correlation Coefficient

Invesco PHLX  Global X

Very weak diversification

The 3 months correlation between Invesco and Global is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Invesco PHLX Semiconductor and Global X Genomics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Genomics and Invesco PHLX 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 PHLX Semiconductor 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 Genomics has no effect on the direction of Invesco PHLX i.e., Invesco PHLX and Global X go up and down completely randomly.

Pair Corralation between Invesco PHLX and Global X

Given the investment horizon of 90 days Invesco PHLX Semiconductor is expected to generate 1.25 times more return on investment than Global X. However, Invesco PHLX is 1.25 times more volatile than Global X Genomics. It trades about 0.15 of its potential returns per unit of risk. Global X Genomics is currently generating about -0.18 per unit of risk. If you would invest  3,947  in Invesco PHLX Semiconductor on October 9, 2024 and sell it today you would earn a total of  234.00  from holding Invesco PHLX Semiconductor or generate 5.93% return on investment over 90 days.

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

Invesco PHLX Semiconductor  vs.  Global X Genomics

Invesco PHLX Semicon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco PHLX Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Invesco PHLX is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Global X Genomics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Invesco PHLX and Global X

The main advantage of trading using opposite Invesco PHLX and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco PHLX 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 PHLX Semiconductor and Global X Genomics 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.