Correlation Between Global X and EMQQ Emerging

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

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

Diversification Opportunities for Global X and EMQQ Emerging

0.93

Correlation Coefficient

Global X  EMQQ Emerging

Almost no diversification

The 3 months correlation between Global and EMQQ is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Global X MSCI and EMQQ The Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMQQ The Emerging 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 MSCI are associated (or correlated) with EMQQ Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMQQ The Emerging has no effect on the direction of Global X i.e., Global X and EMQQ Emerging go up and down completely randomly.

Pair Corralation between Global X and EMQQ Emerging

Given the investment horizon of 90 days Global X MSCI is expected to generate 2.26 times more return on investment than EMQQ Emerging. However, Global X is 2.26 times more volatile than EMQQ The Emerging. It trades about 0.06 of its potential returns per unit of risk. EMQQ The Emerging is currently generating about 0.12 per unit of risk. If you would invest  1,952  in Global X MSCI on September 15, 2024 and sell it today you would earn a total of  53.00  from holding Global X MSCI or generate 2.72% 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 MSCI  vs.  EMQQ The Emerging

Global X MSCI

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X MSCI are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, Global X reported solid returns over the last few months and may actually be approaching a breakup point.

EMQQ The Emerging

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EMQQ The Emerging are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, EMQQ Emerging may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Global X and EMQQ Emerging

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

The idea behind Global X MSCI and EMQQ The Emerging 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.