Correlation Between Global X and Invesco CEF

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

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

Diversification Opportunities for Global X and Invesco CEF

0.53

Correlation Coefficient

Global X  Invesco CEF

Very weak diversification

The 3 months correlation between Global and Invesco is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Global X SuperIncome and Invesco CEF Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco CEF Income and Global X 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 Global X SuperIncome are associated (or correlated) with Invesco CEF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco CEF Income has no effect on the direction of Global X i.e., Global X and Invesco CEF go up and down completely randomly.

Pair Corralation between Global X and Invesco CEF

Given the investment horizon of 90 days Global X SuperIncome is expected to under-perform the Invesco CEF. In addition to that, Global X is 1.01 times more volatile than Invesco CEF Income. It trades about 0.0 of its total potential returns per unit of risk. Invesco CEF Income is currently generating about 0.04 per unit of volatility. If you would invest  1,912  in Invesco CEF Income on October 7, 2024 and sell it today you would earn a total of  24.00  from holding Invesco CEF Income or generate 1.26% return on investment over 90 days.

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

Global X SuperIncome  vs.  Invesco CEF Income

Global X SuperIncome

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X SuperIncome has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Global X is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Invesco CEF Income

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco CEF Income are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Invesco CEF is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Global X and Invesco CEF

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

The idea behind Global X SuperIncome and Invesco CEF Income 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.