Correlation Between Ocean Park and Global X

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

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

Diversification Opportunities for Ocean Park and Global X

0.13

Correlation Coefficient

Ocean Park  Global X

Average diversification

The 3 months correlation between Ocean and Global is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Ocean Park International and Global X Alternative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Alternative and Ocean Park 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 Ocean Park International 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 Alternative has no effect on the direction of Ocean Park i.e., Ocean Park and Global X go up and down completely randomly.

Pair Corralation between Ocean Park and Global X

Given the investment horizon of 90 days Ocean Park is expected to generate 3.78 times less return on investment than Global X. In addition to that, Ocean Park is 2.14 times more volatile than Global X Alternative. It trades about 0.02 of its total potential returns per unit of risk. Global X Alternative is currently generating about 0.16 per unit of volatility. If you would invest  1,161  in Global X Alternative on September 5, 2024 and sell it today you would earn a total of  49.00  from holding Global X Alternative or generate 4.22% return on investment over 90 days.

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

Ocean Park International  vs.  Global X Alternative

Ocean Park International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ocean Park International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward-looking signals, Ocean Park is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Global X Alternative

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Ocean Park and Global X

The main advantage of trading using opposite Ocean Park and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ocean Park 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 Ocean Park International and Global X Alternative 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.