Correlation Between Global X and BetaPro Canadian

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

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

Diversification Opportunities for Global X and BetaPro Canadian

0.88

Correlation Coefficient

Global X  BetaPro Canadian

Very poor diversification

The 3 months correlation between Global and BetaPro is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Global X Enhanced and BetaPro Canadian Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro Canadian Gold 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 Enhanced are associated (or correlated) with BetaPro Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro Canadian Gold has no effect on the direction of Global X i.e., Global X and BetaPro Canadian go up and down completely randomly.

Pair Corralation between Global X and BetaPro Canadian

Assuming the 90 days trading horizon Global X Enhanced is expected to under-perform the BetaPro Canadian. But the etf apears to be less risky and, when comparing its historical volatility, Global X Enhanced is 1.89 times less risky than BetaPro Canadian. The etf trades about -0.01 of its potential returns per unit of risk. The BetaPro Canadian Gold is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,459  in BetaPro Canadian Gold on September 12, 2024 and sell it today you would earn a total of  6.00  from holding BetaPro Canadian Gold or generate 0.24% return on investment over 90 days.

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

Global X Enhanced  vs.  BetaPro Canadian Gold

Global X Enhanced

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X Enhanced has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

BetaPro Canadian Gold

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BetaPro Canadian Gold are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, BetaPro 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 BetaPro Canadian

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

The idea behind Global X Enhanced and BetaPro Canadian Gold 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.