Correlation Between Gulf Island and Global X

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

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

Diversification Opportunities for Gulf Island and Global X

-0.43

Correlation Coefficient

Gulf Island  Global X

Very good diversification

The 3 months correlation between Gulf and Global is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Island Fabrication and Global X Disruptive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Disruptive and Gulf Island 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 Gulf Island Fabrication 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 Disruptive has no effect on the direction of Gulf Island i.e., Gulf Island and Global X go up and down completely randomly.

Pair Corralation between Gulf Island and Global X

Given the investment horizon of 90 days Gulf Island Fabrication is expected to under-perform the Global X. In addition to that, Gulf Island is 1.6 times more volatile than Global X Disruptive. It trades about -0.08 of its total potential returns per unit of risk. Global X Disruptive is currently generating about 0.1 per unit of volatility. If you would invest  1,454  in Global X Disruptive on December 25, 2024 and sell it today you would earn a total of  113.00  from holding Global X Disruptive or generate 7.77% return on investment over 90 days.

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

Gulf Island Fabrication  vs.  Global X Disruptive

Gulf Island Fabrication

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gulf Island Fabrication has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Global X Disruptive

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Disruptive are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Gulf Island and Global X

The main advantage of trading using opposite Gulf Island and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gulf Island 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 Gulf Island Fabrication and Global X Disruptive 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.