Correlation Between Global X and ProShares MSCI

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

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

Diversification Opportunities for Global X and ProShares MSCI

0.0

Correlation Coefficient

Global X  ProShares MSCI

Pay attention - limited upside

The 3 months correlation between Global and ProShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Global X Alternative and ProShares MSCI Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares MSCI Emerging 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 Alternative are associated (or correlated) with ProShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares MSCI Emerging has no effect on the direction of Global X i.e., Global X and ProShares MSCI go up and down completely randomly.

Pair Corralation between Global X and ProShares MSCI

Given the investment horizon of 90 days Global X is expected to generate 4.19 times less return on investment than ProShares MSCI. But when comparing it to its historical volatility, Global X Alternative is 4.44 times less risky than ProShares MSCI. It trades about 0.07 of its potential returns per unit of risk. ProShares MSCI Emerging is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4,196  in ProShares MSCI Emerging on September 13, 2024 and sell it today you would earn a total of  281.50  from holding ProShares MSCI Emerging or generate 6.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Global X Alternative  vs.  ProShares MSCI Emerging

Global X Alternative

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Alternative are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Global X is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

ProShares MSCI Emerging

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares MSCI Emerging are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, ProShares MSCI may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Global X and ProShares MSCI

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

The idea behind Global X Alternative and ProShares MSCI Emerging 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .