Correlation Between Formidable ETF and Global X

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

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

Diversification Opportunities for Formidable ETF and Global X

0.69

Correlation Coefficient

Formidable ETF  Global X

Poor diversification

The 3 months correlation between Formidable and Global is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Formidable ETF and Global X Thematic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Thematic and Formidable ETF 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 Formidable ETF 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 Thematic has no effect on the direction of Formidable ETF i.e., Formidable ETF and Global X go up and down completely randomly.

Pair Corralation between Formidable ETF and Global X

Given the investment horizon of 90 days Formidable ETF is expected to under-perform the Global X. But the etf apears to be less risky and, when comparing its historical volatility, Formidable ETF is 1.44 times less risky than Global X. The etf trades about -0.19 of its potential returns per unit of risk. The Global X Thematic is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  2,508  in Global X Thematic on December 4, 2024 and sell it today you would lose (135.00) from holding Global X Thematic or give up 5.38% of portfolio value over 90 days.

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

Formidable ETF  vs.  Global X Thematic

Formidable ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days Formidable ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the Etf traders.

Global X Thematic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global X Thematic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Global X is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Formidable ETF and Global X

The main advantage of trading using opposite Formidable ETF and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formidable ETF 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 Formidable ETF and Global X Thematic 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.