Correlation Between Listed Funds and Global X

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

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

Diversification Opportunities for Listed Funds and Global X

0.19

Correlation Coefficient

Listed Funds  Global X

Average diversification

The 3 months correlation between Listed and Global is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Listed Funds Trust and Global X Dow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Dow and Listed Funds 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 Listed Funds Trust 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 Dow has no effect on the direction of Listed Funds i.e., Listed Funds and Global X go up and down completely randomly.

Pair Corralation between Listed Funds and Global X

Given the investment horizon of 90 days Listed Funds Trust is expected to under-perform the Global X. In addition to that, Listed Funds is 1.22 times more volatile than Global X Dow. It trades about -0.23 of its total potential returns per unit of risk. Global X Dow is currently generating about -0.03 per unit of volatility. If you would invest  2,255  in Global X Dow on October 10, 2024 and sell it today you would lose (9.00) from holding Global X Dow or give up 0.4% of portfolio value over 90 days.

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

Listed Funds Trust  vs.  Global X Dow

Listed Funds Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Listed Funds Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Listed Funds is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Global X Dow

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Dow are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Global X is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Listed Funds and Global X

The main advantage of trading using opposite Listed Funds and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Listed Funds 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 Listed Funds Trust and Global X Dow 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.