Correlation Between Global X and Invesco SP

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

By analyzing existing cross correlation between Global X SuperDividend and Invesco SP Emerging, you can compare the effects of market volatilities on Global X and Invesco SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Invesco SP.

Diversification Opportunities for Global X and Invesco SP

0.68

Correlation Coefficient

Global X  Invesco SP

Poor diversification

The 3 months correlation between Global and Invesco is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Global X SuperDividend and Invesco SP Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP Emerging 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 SuperDividend are associated (or correlated) with Invesco SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP Emerging has no effect on the direction of Global X i.e., Global X and Invesco SP go up and down completely randomly.

Pair Corralation between Global X and Invesco SP

Given the investment horizon of 90 days Global X SuperDividend is expected to under-perform the Invesco SP. But the etf apears to be less risky and, when comparing its historical volatility, Global X SuperDividend is 1.18 times less risky than Invesco SP. The etf trades about -0.15 of its potential returns per unit of risk. The Invesco SP Emerging is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,697  in Invesco SP Emerging on September 14, 2024 and sell it today you would lose (11.00) from holding Invesco SP Emerging or give up 0.65% of portfolio value over 90 days.

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

Global X SuperDividend  vs.  Invesco SP Emerging

Global X SuperDividend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X SuperDividend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Etf's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Invesco SP Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Global X and Invesco SP

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

The idea behind Global X SuperDividend and Invesco SP Emerging 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.