Correlation Between Guru Favorite and Global X

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

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

Diversification Opportunities for Guru Favorite and Global X

-0.66

Correlation Coefficient

Guru Favorite  Global X

Excellent diversification

The 3 months correlation between Guru and Global is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Guru Favorite Stocks and Global X Aging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Aging and Guru Favorite 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 Guru Favorite Stocks 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 Aging has no effect on the direction of Guru Favorite i.e., Guru Favorite and Global X go up and down completely randomly.

Pair Corralation between Guru Favorite and Global X

Given the investment horizon of 90 days Guru Favorite Stocks is expected to generate 1.16 times more return on investment than Global X. However, Guru Favorite is 1.16 times more volatile than Global X Aging. It trades about 0.23 of its potential returns per unit of risk. Global X Aging is currently generating about -0.05 per unit of risk. If you would invest  2,902  in Guru Favorite Stocks on September 5, 2024 and sell it today you would earn a total of  350.00  from holding Guru Favorite Stocks or generate 12.06% return on investment over 90 days.

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

Guru Favorite Stocks  vs.  Global X Aging

Guru Favorite Stocks

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guru Favorite Stocks are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Guru Favorite may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Global X Aging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X Aging 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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Guru Favorite and Global X

The main advantage of trading using opposite Guru Favorite and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guru Favorite 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 Guru Favorite Stocks and Global X Aging 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..