Correlation Between Brompton Flaherty and Global X

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

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

Diversification Opportunities for Brompton Flaherty and Global X

0.47

Correlation Coefficient

Brompton Flaherty  Global X

Very weak diversification

The 3 months correlation between Brompton and Global is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Brompton Flaherty Crumrine and Global X Active in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Active and Brompton Flaherty 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 Brompton Flaherty Crumrine 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 Active has no effect on the direction of Brompton Flaherty i.e., Brompton Flaherty and Global X go up and down completely randomly.

Pair Corralation between Brompton Flaherty and Global X

Assuming the 90 days trading horizon Brompton Flaherty is expected to generate 4.38 times less return on investment than Global X. In addition to that, Brompton Flaherty is 1.56 times more volatile than Global X Active. It trades about 0.02 of its total potential returns per unit of risk. Global X Active is currently generating about 0.14 per unit of volatility. If you would invest  920.00  in Global X Active on December 30, 2024 and sell it today you would earn a total of  24.00  from holding Global X Active or generate 2.61% return on investment over 90 days.

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

Brompton Flaherty Crumrine  vs.  Global X Active

Brompton Flaherty

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brompton Flaherty Crumrine are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Brompton Flaherty is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Global X Active

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Active are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Global X is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Brompton Flaherty and Global X

The main advantage of trading using opposite Brompton Flaherty and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brompton Flaherty 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 Brompton Flaherty Crumrine and Global X Active 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.