Correlation Between Advisors Asset and Global X

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

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

Diversification Opportunities for Advisors Asset and Global X

-0.33

Correlation Coefficient

Advisors Asset  Global X

Very good diversification

The 3 months correlation between Advisors and Global is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Advisors Asset Management and Global X MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X MSCI and Advisors Asset 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 Advisors Asset Management 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 MSCI has no effect on the direction of Advisors Asset i.e., Advisors Asset and Global X go up and down completely randomly.

Pair Corralation between Advisors Asset and Global X

Given the investment horizon of 90 days Advisors Asset Management is expected to generate 0.81 times more return on investment than Global X. However, Advisors Asset Management is 1.24 times less risky than Global X. It trades about 0.12 of its potential returns per unit of risk. Global X MSCI is currently generating about 0.0 per unit of risk. If you would invest  1,766  in Advisors Asset Management on October 12, 2024 and sell it today you would earn a total of  243.00  from holding Advisors Asset Management or generate 13.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	70.21%
Values	Daily Returns

Advisors Asset Management  vs.  Global X MSCI

Advisors Asset Management

Risk-Adjusted Performance

0 of 100

Very Strong

Over the last 90 days Advisors Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather abnormal primary indicators, Advisors Asset may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Global X MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Global X is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Advisors Asset and Global X

The main advantage of trading using opposite Advisors Asset and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advisors Asset 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 Advisors Asset Management and Global X MSCI 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.