Correlation Between Ionic Inflation and Global X

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

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

Diversification Opportunities for Ionic Inflation and Global X

0.51

Correlation Coefficient

Ionic Inflation  Global X

Very weak diversification

The 3 months correlation between Ionic and Global is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Ionic Inflation Protection and Global X Interest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Interest and Ionic Inflation 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 Ionic Inflation Protection 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 Interest has no effect on the direction of Ionic Inflation i.e., Ionic Inflation and Global X go up and down completely randomly.

Pair Corralation between Ionic Inflation and Global X

Given the investment horizon of 90 days Ionic Inflation is expected to generate 1.31 times less return on investment than Global X. But when comparing it to its historical volatility, Ionic Inflation Protection is 1.38 times less risky than Global X. It trades about 0.17 of its potential returns per unit of risk. Global X Interest is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,985  in Global X Interest on December 28, 2024 and sell it today you would earn a total of  69.00  from holding Global X Interest or generate 3.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Ionic Inflation Protection  vs.  Global X Interest

Ionic Inflation Prot

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ionic Inflation Protection are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Ionic Inflation is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Global X Interest

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Interest are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Global X is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Ionic Inflation and Global X

The main advantage of trading using opposite Ionic Inflation and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ionic Inflation 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 Ionic Inflation Protection and Global X 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 Stocks Directory module to find actively traded stocks across global markets.