Correlation Between Guardian and Global X

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

By analyzing existing cross correlation between Guardian i3 Global and Global X Global, you can compare the effects of market volatilities on Guardian 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 Guardian with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardian and Global X.

Diversification Opportunities for Guardian and Global X

0.47

Correlation Coefficient

Guardian  Global X

Very weak diversification

The 3 months correlation between Guardian and Global is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Guardian i3 Global and Global X Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Global and Guardian 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 Guardian i3 Global 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 Global has no effect on the direction of Guardian i.e., Guardian and Global X go up and down completely randomly.

Pair Corralation between Guardian and Global X

Assuming the 90 days trading horizon Guardian i3 Global is expected to generate 1.26 times more return on investment than Global X. However, Guardian is 1.26 times more volatile than Global X Global. It trades about 0.1 of its potential returns per unit of risk. Global X Global is currently generating about 0.08 per unit of risk. If you would invest  2,332  in Guardian i3 Global on October 7, 2024 and sell it today you would earn a total of  650.00  from holding Guardian i3 Global or generate 27.87% return on investment over 90 days.

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

Guardian i3 Global  vs.  Global X Global

Guardian i3 Global

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Guardian i3 Global are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Guardian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Global X Global

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Global are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 Guardian and Global X

The main advantage of trading using opposite Guardian and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guardian 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 Guardian i3 Global and Global X Global 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.