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 FinTech and Global X Video, 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

0.36

Correlation Coefficient

Global X  Global X

Weak diversification

The 3 months correlation between Global and Global is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Global X FinTech and Global X Video in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Video 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 FinTech 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 Video 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

Given the investment horizon of 90 days Global X FinTech is expected to generate 1.16 times more return on investment than Global X. However, Global X is 1.16 times more volatile than Global X Video. It trades about 0.07 of its potential returns per unit of risk. Global X Video is currently generating about 0.04 per unit of risk. If you would invest  2,002  in Global X FinTech on September 28, 2024 and sell it today you would earn a total of  1,213  from holding Global X FinTech or generate 60.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Global X FinTech  vs.  Global X Video

Global X FinTech

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X FinTech are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Global X showed solid returns over the last few months and may actually be approaching a breakup point.

Global X Video

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 FinTech and Global X Video 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.