Correlation Between Forstrong Global and Global X

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

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

Diversification Opportunities for Forstrong Global and Global X

0.46

Correlation Coefficient

Forstrong Global  Global X

Very weak diversification

The 3 months correlation between Forstrong and Global is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Forstrong Global Income and Global X Big in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Big and Forstrong Global 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 Forstrong Global Income 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 Big has no effect on the direction of Forstrong Global i.e., Forstrong Global and Global X go up and down completely randomly.

Pair Corralation between Forstrong Global and Global X

Assuming the 90 days trading horizon Forstrong Global is expected to generate 9.04 times less return on investment than Global X. But when comparing it to its historical volatility, Forstrong Global Income is 11.54 times less risky than Global X. It trades about 0.09 of its potential returns per unit of risk. Global X Big is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  875.00  in Global X Big on October 5, 2024 and sell it today you would earn a total of  1,335  from holding Global X Big or generate 152.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	71.05%
Values	Daily Returns

Forstrong Global Income  vs.  Global X Big

Forstrong Global Income

Risk-Adjusted Performance

0 of 100

Very Weak

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

Global X Big

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Big are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Forstrong Global and Global X

The main advantage of trading using opposite Forstrong Global and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forstrong Global 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 Forstrong Global Income and Global X Big 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.