Correlation Between ALPS Clean and Global X

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

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

Diversification Opportunities for ALPS Clean and Global X

0.82

Correlation Coefficient

ALPS Clean  Global X

Very poor diversification

The 3 months correlation between ALPS and Global is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding ALPS Clean Energy and Global X CleanTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X CleanTech and ALPS Clean 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 ALPS Clean Energy 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 CleanTech has no effect on the direction of ALPS Clean i.e., ALPS Clean and Global X go up and down completely randomly.

Pair Corralation between ALPS Clean and Global X

Given the investment horizon of 90 days ALPS Clean Energy is expected to generate 1.04 times more return on investment than Global X. However, ALPS Clean is 1.04 times more volatile than Global X CleanTech. It trades about -0.04 of its potential returns per unit of risk. Global X CleanTech is currently generating about -0.07 per unit of risk. If you would invest  5,012  in ALPS Clean Energy on October 7, 2024 and sell it today you would lose (2,232) from holding ALPS Clean Energy or give up 44.53% of portfolio value over 90 days.

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

ALPS Clean Energy  vs.  Global X CleanTech

ALPS Clean Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALPS Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, ALPS Clean is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Global X CleanTech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X CleanTech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with ALPS Clean and Global X

The main advantage of trading using opposite ALPS Clean and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALPS Clean 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 ALPS Clean Energy and Global X CleanTech 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 Global Correlations module to find global opportunities by holding instruments from different markets.