Correlation Between Global X and Virtus ETF

Can any of the company-specific risk be diversified away by investing in both Global X and Virtus 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 Virtus 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 Virtus ETF Trust, you can compare the effects of market volatilities on Global X and Virtus 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 Virtus ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Virtus ETF.

Diversification Opportunities for Global X and Virtus ETF

0.5

Correlation Coefficient

Global X  Virtus ETF

Very weak diversification

The 3 months correlation between Global and Virtus is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Global X Thematic and Virtus ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus ETF Trust 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 Virtus ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus ETF Trust has no effect on the direction of Global X i.e., Global X and Virtus ETF go up and down completely randomly.

Pair Corralation between Global X and Virtus ETF

Given the investment horizon of 90 days Global X is expected to generate 1.57 times less return on investment than Virtus ETF. In addition to that, Global X is 1.44 times more volatile than Virtus ETF Trust. It trades about 0.06 of its total potential returns per unit of risk. Virtus ETF Trust is currently generating about 0.13 per unit of volatility. If you would invest  3,420  in Virtus ETF Trust on September 17, 2024 and sell it today you would earn a total of  559.00  from holding Virtus ETF Trust or generate 16.35% return on investment over 90 days.

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

Global X Thematic  vs.  Virtus ETF Trust

Global X Thematic

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Thematic are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. 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.

Virtus ETF Trust

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus ETF Trust are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical and fundamental indicators, Virtus ETF may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Global X and Virtus ETF

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

The idea behind Global X Thematic and Virtus ETF Trust 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.