Correlation Between Global X and Global X

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

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

Diversification Opportunities for Global X and Global X

0.94

Correlation Coefficient

Global X  Global X

Almost no diversification

The 3 months correlation between Global and Global is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Global X Physical and Global X Physical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Physical 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 Physical 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 Physical has no effect on the direction of Global X i.e., Global X and Global X go up and down completely randomly.

Pair Corralation between Global X and Global X

Assuming the 90 days trading horizon Global X is expected to generate 1.52 times less return on investment than Global X. In addition to that, Global X is 1.3 times more volatile than Global X Physical. It trades about 0.06 of its total potential returns per unit of risk. Global X Physical is currently generating about 0.12 per unit of volatility. If you would invest  22,577  in Global X Physical on September 3, 2024 and sell it today you would earn a total of  1,964  from holding Global X Physical or generate 8.7% return on investment over 90 days.

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

Global X Physical  vs.  Global X Physical

Global X Physical

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Physical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Global X is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Global X Physical

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Physical are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Global X and Global X

The main advantage of trading using opposite Global X and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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 Global X Physical and Global X Physical 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.