Correlation Between Global X and Guardian Canadian

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

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

Diversification Opportunities for Global X and Guardian Canadian

0.97

Correlation Coefficient

Global X  Guardian Canadian

Almost no diversification

The 3 months correlation between Global and Guardian is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Global X Canadian and Guardian Canadian Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian Canadian Bond 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 Canadian are associated (or correlated) with Guardian Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian Canadian Bond has no effect on the direction of Global X i.e., Global X and Guardian Canadian go up and down completely randomly.

Pair Corralation between Global X and Guardian Canadian

Assuming the 90 days trading horizon Global X Canadian is expected to under-perform the Guardian Canadian. In addition to that, Global X is 1.03 times more volatile than Guardian Canadian Bond. It trades about -0.01 of its total potential returns per unit of risk. Guardian Canadian Bond is currently generating about 0.01 per unit of volatility. If you would invest  1,854  in Guardian Canadian Bond on September 15, 2024 and sell it today you would earn a total of  3.00  from holding Guardian Canadian Bond or generate 0.16% return on investment over 90 days.

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

Global X Canadian  vs.  Guardian Canadian Bond

Global X Canadian

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X Canadian has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, Global X is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Guardian Canadian Bond

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Guardian Canadian Bond has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Guardian Canadian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Global X and Guardian Canadian

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

The idea behind Global X Canadian and Guardian Canadian Bond 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.