Correlation Between Defiance Next and Global X

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

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

Diversification Opportunities for Defiance Next and Global X

0.99

Correlation Coefficient

Defiance Next  Global X

No risk reduction

The 3 months correlation between Defiance and Global is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Defiance Next Gen and Global X Hydrogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Hydrogen and Defiance Next 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 Defiance Next Gen 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 Hydrogen has no effect on the direction of Defiance Next i.e., Defiance Next and Global X go up and down completely randomly.

Pair Corralation between Defiance Next and Global X

Given the investment horizon of 90 days Defiance Next Gen is expected to generate 0.76 times more return on investment than Global X. However, Defiance Next Gen is 1.31 times less risky than Global X. It trades about -0.15 of its potential returns per unit of risk. Global X Hydrogen is currently generating about -0.14 per unit of risk. If you would invest  3,477  in Defiance Next Gen on December 29, 2024 and sell it today you would lose (714.00) from holding Defiance Next Gen or give up 20.53% of portfolio value over 90 days.

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

Defiance Next Gen  vs.  Global X Hydrogen

Defiance Next Gen

Risk-Adjusted Performance

Very Weak

Over the last 90 days Defiance Next Gen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Global X Hydrogen

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global X Hydrogen has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Etf's fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the ETF retail investors.

Pair Trading with Defiance Next and Global X

The main advantage of trading using opposite Defiance Next and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Defiance Next 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 Defiance Next Gen and Global X Hydrogen 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.