Correlation Between CI Global and Global X

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

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

Diversification Opportunities for CI Global and Global X

0.32

Correlation Coefficient

CI Global  Global X

Weak diversification

The 3 months correlation between CGRA and Global is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding CI Global Real and Global X Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Global and CI Global 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 CI Global Real 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 Global has no effect on the direction of CI Global i.e., CI Global and Global X go up and down completely randomly.

Pair Corralation between CI Global and Global X

Assuming the 90 days trading horizon CI Global Real is expected to generate 0.9 times more return on investment than Global X. However, CI Global Real is 1.11 times less risky than Global X. It trades about 0.08 of its potential returns per unit of risk. Global X Global is currently generating about 0.04 per unit of risk. If you would invest  1,983  in CI Global Real on October 22, 2024 and sell it today you would earn a total of  255.00  from holding CI Global Real or generate 12.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.56%
Values	Daily Returns

CI Global Real  vs.  Global X Global

CI Global Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CI Global Real has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, CI Global is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Global X Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X Global has generated negative risk-adjusted returns adding no value to investors with long positions. 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 CI Global and Global X

The main advantage of trading using opposite CI Global and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI Global 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 CI Global Real and Global X Global 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.