Correlation Between Global X and Guru Favorite

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

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

Diversification Opportunities for Global X and Guru Favorite

-0.73

Correlation Coefficient

Global X  Guru Favorite

Pay attention - limited upside

The 3 months correlation between Global and Guru is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Global X Aging and Guru Favorite Stocks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guru Favorite Stocks 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 Aging are associated (or correlated) with Guru Favorite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guru Favorite Stocks has no effect on the direction of Global X i.e., Global X and Guru Favorite go up and down completely randomly.

Pair Corralation between Global X and Guru Favorite

Given the investment horizon of 90 days Global X Aging is expected to under-perform the Guru Favorite. But the etf apears to be less risky and, when comparing its historical volatility, Global X Aging is 1.14 times less risky than Guru Favorite. The etf trades about -0.12 of its potential returns per unit of risk. The Guru Favorite Stocks is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  2,979  in Guru Favorite Stocks on September 13, 2024 and sell it today you would earn a total of  277.00  from holding Guru Favorite Stocks or generate 9.3% return on investment over 90 days.

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

Global X Aging  vs.  Guru Favorite Stocks

Global X Aging

Risk-Adjusted Performance

0 of 100

Very Weak

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

Guru Favorite Stocks

Risk-Adjusted Performance

14 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guru Favorite Stocks are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Guru Favorite may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Global X and Guru Favorite

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

The idea behind Global X Aging and Guru Favorite Stocks 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.