Correlation Between REX AI and Global X

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

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

Diversification Opportunities for REX AI and Global X

0.96

Correlation Coefficient

REX AI  Global X

Almost no diversification

The 3 months correlation between REX and Global is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding REX AI Equity and Global X SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X SP and REX AI 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 REX AI Equity 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 SP has no effect on the direction of REX AI i.e., REX AI and Global X go up and down completely randomly.

Pair Corralation between REX AI and Global X

Given the investment horizon of 90 days REX AI is expected to generate 2.31 times less return on investment than Global X. In addition to that, REX AI is 2.31 times more volatile than Global X SP. It trades about 0.05 of its total potential returns per unit of risk. Global X SP is currently generating about 0.27 per unit of volatility. If you would invest  4,196  in Global X SP on September 23, 2024 and sell it today you would earn a total of  104.00  from holding Global X SP or generate 2.48% return on investment over 90 days.

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

REX AI Equity  vs.  Global X SP

REX AI Equity

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in REX AI Equity are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, REX AI may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Global X SP

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X SP are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Global X is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with REX AI and Global X

The main advantage of trading using opposite REX AI and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REX AI 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 REX AI Equity and Global X SP 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.