Correlation Between BFIT and Global X

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

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

Diversification Opportunities for BFIT and Global X

-0.12

Correlation Coefficient

BFIT  Global X

Good diversification

The 3 months correlation between BFIT and Global is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding BFIT and Global X Clean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Clean and BFIT 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 BFIT 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 Clean has no effect on the direction of BFIT i.e., BFIT and Global X go up and down completely randomly.

Pair Corralation between BFIT and Global X

If you would invest  1,777  in Global X Clean on September 13, 2024 and sell it today you would earn a total of  35.00  from holding Global X Clean or generate 1.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

BFIT  vs.  Global X Clean

BFIT

Risk-Adjusted Performance

0 of 100

Very Weak

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

Global X Clean

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Clean are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Global X is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BFIT and Global X

The main advantage of trading using opposite BFIT and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BFIT 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 BFIT and Global X Clean 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.