Correlation Between Global X and Roundhill Video

Can any of the company-specific risk be diversified away by investing in both Global X and Roundhill Video 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 Roundhill Video 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 Roundhill Video Games, you can compare the effects of market volatilities on Global X and Roundhill Video 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 Roundhill Video. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Roundhill Video.

Diversification Opportunities for Global X and Roundhill Video

0.91

Correlation Coefficient

Global X  Roundhill Video

Almost no diversification

The 3 months correlation between Global and Roundhill is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Global X FinTech and Roundhill Video Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roundhill Video Games 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 Roundhill Video. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roundhill Video Games has no effect on the direction of Global X i.e., Global X and Roundhill Video go up and down completely randomly.

Pair Corralation between Global X and Roundhill Video

Given the investment horizon of 90 days Global X FinTech is expected to under-perform the Roundhill Video. But the etf apears to be less risky and, when comparing its historical volatility, Global X FinTech is 1.05 times less risky than Roundhill Video. The etf trades about -0.21 of its potential returns per unit of risk. The Roundhill Video Games is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  2,088  in Roundhill Video Games on October 1, 2024 and sell it today you would lose (49.80) from holding Roundhill Video Games or give up 2.39% of portfolio value over 90 days.

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

Global X FinTech  vs.  Roundhill Video Games

Global X FinTech

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X FinTech are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Global X showed solid returns over the last few months and may actually be approaching a breakup point.

Roundhill Video Games

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Roundhill Video Games are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Roundhill Video exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global X and Roundhill Video

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

The idea behind Global X FinTech and Roundhill Video Games 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.