Correlation Between Invesco Variable and Global X

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

Diversification Opportunities for Invesco Variable and Global X

0.9

Correlation Coefficient

Invesco Variable  Global X

Almost no diversification

The 3 months correlation between Invesco and Global is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Variable Rate and Global X Variable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Variable and Invesco Variable 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 Variable Rate 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 Variable has no effect on the direction of Invesco Variable i.e., Invesco Variable and Global X go up and down completely randomly.

Pair Corralation between Invesco Variable and Global X

Considering the 90-day investment horizon Invesco Variable is expected to generate 1.35 times less return on investment than Global X. But when comparing it to its historical volatility, Invesco Variable Rate is 1.87 times less risky than Global X. It trades about 0.16 of its potential returns per unit of risk. Global X Variable is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,337  in Global X Variable on August 30, 2024 and sell it today you would earn a total of  75.00  from holding Global X Variable or generate 3.21% return on investment over 90 days.

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

Invesco Variable Rate  vs.  Global X Variable

Invesco Variable Rate

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Variable Rate are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Invesco Variable is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Global X Variable

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Variable are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical and fundamental indicators, Global X is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Invesco Variable and Global X

The main advantage of trading using opposite Invesco Variable and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Variable 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 Variable Rate and Global X Variable 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.