Correlation Between GLOBAL X and Purpose High

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

By analyzing existing cross correlation between GLOBAL X HIGH and Purpose High Interest, you can compare the effects of market volatilities on GLOBAL X and Purpose High 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 Purpose High. Check out your portfolio center. Please also check ongoing floating volatility patterns of GLOBAL X and Purpose High.

Diversification Opportunities for GLOBAL X and Purpose High

0.9

Correlation Coefficient

GLOBAL X  Purpose High

Almost no diversification

The 3 months correlation between GLOBAL and Purpose is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding GLOBAL X HIGH and Purpose High Interest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Purpose High Interest 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 HIGH are associated (or correlated) with Purpose High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Purpose High Interest has no effect on the direction of GLOBAL X i.e., GLOBAL X and Purpose High go up and down completely randomly.

Pair Corralation between GLOBAL X and Purpose High

Assuming the 90 days trading horizon GLOBAL X HIGH is expected to generate about the same return on investment as Purpose High Interest. However, GLOBAL X is 1.91 times more volatile than Purpose High Interest. It trades about 0.46 of its potential returns per unit of risk. Purpose High Interest is currently producing about 0.88 per unit of risk. If you would invest  4,991  in Purpose High Interest on October 10, 2024 and sell it today you would earn a total of  14.00  from holding Purpose High Interest or generate 0.28% return on investment over 90 days.

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

GLOBAL X HIGH  vs.  Purpose High Interest

GLOBAL X HIGH

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GLOBAL X HIGH are ranked lower than 23 (%) 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.

Purpose High Interest

Risk-Adjusted Performance

72 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Purpose High Interest are ranked lower than 72 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Purpose High is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with GLOBAL X and Purpose High

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

The idea behind GLOBAL X HIGH and Purpose High Interest 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.