Correlation Between Global X and Formidable ETF

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

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

Diversification Opportunities for Global X and Formidable ETF

0.17

Correlation Coefficient

Global X  Formidable ETF

Average diversification

The 3 months correlation between Global and Formidable is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Global X Thematic and Formidable ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formidable ETF 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 Thematic are associated (or correlated) with Formidable ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formidable ETF has no effect on the direction of Global X i.e., Global X and Formidable ETF go up and down completely randomly.

Pair Corralation between Global X and Formidable ETF

Given the investment horizon of 90 days Global X Thematic is expected to generate 1.91 times more return on investment than Formidable ETF. However, Global X is 1.91 times more volatile than Formidable ETF. It trades about 0.09 of its potential returns per unit of risk. Formidable ETF is currently generating about -0.07 per unit of risk. If you would invest  2,343  in Global X Thematic on September 14, 2024 and sell it today you would earn a total of  165.00  from holding Global X Thematic or generate 7.04% return on investment over 90 days.

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

Global X Thematic  vs.  Formidable ETF

Global X Thematic

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Thematic are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Formidable ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Formidable ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Formidable ETF is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Global X and Formidable ETF

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

The idea behind Global X Thematic and Formidable ETF 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.