Correlation Between Global X and Defiance ETFs

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

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

Diversification Opportunities for Global X and Defiance ETFs

0.84

Correlation Coefficient

Global X  Defiance ETFs

Very poor diversification

The 3 months correlation between Global and Defiance is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Global X Cloud and Defiance ETFs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defiance ETFs 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 Cloud are associated (or correlated) with Defiance ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defiance ETFs has no effect on the direction of Global X i.e., Global X and Defiance ETFs go up and down completely randomly.

Pair Corralation between Global X and Defiance ETFs

If you would invest  2,113  in Global X Cloud on September 4, 2024 and sell it today you would earn a total of  362.00  from holding Global X Cloud or generate 17.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	4.76%
Values	Daily Returns

Global X Cloud  vs.  Defiance ETFs

Global X Cloud

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Cloud are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Global X unveiled solid returns over the last few months and may actually be approaching a breakup point.

Defiance ETFs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Defiance ETFs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Defiance ETFs is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Global X and Defiance ETFs

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

The idea behind Global X Cloud and Defiance ETFs 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.