Correlation Between Global X and Alphabet

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

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

Diversification Opportunities for Global X and Alphabet

0.87

Correlation Coefficient

Global X  Alphabet

Very poor diversification

The 3 months correlation between Global and Alphabet is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds and Alphabet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet 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 Funds are associated (or correlated) with Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet has no effect on the direction of Global X i.e., Global X and Alphabet go up and down completely randomly.

Pair Corralation between Global X and Alphabet

Assuming the 90 days trading horizon Global X Funds is expected to generate 1.01 times more return on investment than Alphabet. However, Global X is 1.01 times more volatile than Alphabet. It trades about -0.15 of its potential returns per unit of risk. Alphabet is currently generating about -0.22 per unit of risk. If you would invest  5,068  in Global X Funds on December 27, 2024 and sell it today you would lose (754.00) from holding Global X Funds or give up 14.88% of portfolio value over 90 days.

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

Global X Funds  vs.  Alphabet

Global X Funds

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global X Funds has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Alphabet

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alphabet has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Global X and Alphabet

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

The idea behind Global X Funds and Alphabet 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..