Correlation Between Global X and Democracy International

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

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

Diversification Opportunities for Global X and Democracy International

0.76

Correlation Coefficient

Global X  Democracy International

Poor diversification

The 3 months correlation between Global and Democracy is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Global X Disruptive and Democracy International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Democracy International 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 Disruptive are associated (or correlated) with Democracy International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Democracy International has no effect on the direction of Global X i.e., Global X and Democracy International go up and down completely randomly.

Pair Corralation between Global X and Democracy International

Given the investment horizon of 90 days Global X Disruptive is expected to under-perform the Democracy International. In addition to that, Global X is 2.62 times more volatile than Democracy International. It trades about -0.04 of its total potential returns per unit of risk. Democracy International is currently generating about -0.07 per unit of volatility. If you would invest  2,589  in Democracy International on October 23, 2024 and sell it today you would lose (78.00) from holding Democracy International or give up 3.01% of portfolio value over 90 days.

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

Global X Disruptive  vs.  Democracy International

Global X Disruptive

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X Disruptive has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Global X is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Democracy International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Global X and Democracy International

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

The idea behind Global X Disruptive and Democracy International 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.