Correlation Between Global X and SPDR Galaxy

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

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

Diversification Opportunities for Global X and SPDR Galaxy

-0.68

Correlation Coefficient

Global X  SPDR Galaxy

Excellent diversification

The 3 months correlation between Global and SPDR is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds and SPDR Galaxy Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Galaxy Digital 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 Funds are associated (or correlated) with SPDR Galaxy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Galaxy Digital has no effect on the direction of Global X i.e., Global X and SPDR Galaxy go up and down completely randomly.

Pair Corralation between Global X and SPDR Galaxy

Considering the 90-day investment horizon Global X Funds is expected to under-perform the SPDR Galaxy. But the etf apears to be less risky and, when comparing its historical volatility, Global X Funds is 5.02 times less risky than SPDR Galaxy. The etf trades about -0.2 of its potential returns per unit of risk. The SPDR Galaxy Digital is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  3,745  in SPDR Galaxy Digital on October 10, 2024 and sell it today you would lose (173.00) from holding SPDR Galaxy Digital or give up 4.62% of portfolio value over 90 days.

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

Global X Funds  vs.  SPDR Galaxy Digital

Global X Funds

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X Funds has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Global X is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

SPDR Galaxy Digital

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Galaxy Digital are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, SPDR Galaxy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global X and SPDR Galaxy

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

The idea behind Global X Funds and SPDR Galaxy Digital 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.