Correlation Between Global X and Invesco Optimum

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

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

Diversification Opportunities for Global X and Invesco Optimum

0.74

Correlation Coefficient

Global X  Invesco Optimum

Poor diversification

The 3 months correlation between Global and Invesco is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Global X Disruptive and Invesco Optimum Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Optimum Yield 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 Disruptive are associated (or correlated) with Invesco Optimum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Optimum Yield has no effect on the direction of Global X i.e., Global X and Invesco Optimum go up and down completely randomly.

Pair Corralation between Global X and Invesco Optimum

Given the investment horizon of 90 days Global X Disruptive is expected to generate 2.43 times more return on investment than Invesco Optimum. However, Global X is 2.43 times more volatile than Invesco Optimum Yield. It trades about 0.13 of its potential returns per unit of risk. Invesco Optimum Yield is currently generating about 0.07 per unit of risk. If you would invest  1,312  in Global X Disruptive on September 12, 2024 and sell it today you would earn a total of  261.00  from holding Global X Disruptive or generate 19.89% return on investment over 90 days.

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

Global X Disruptive  vs.  Invesco Optimum Yield

Global X Disruptive

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Disruptive are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Global X unveiled solid returns over the last few months and may actually be approaching a breakup point.

Invesco Optimum Yield

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Optimum Yield are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Invesco Optimum is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Global X and Invesco Optimum

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

The idea behind Global X Disruptive and Invesco Optimum Yield 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.