Correlation Between Global X and Defiance Silver

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

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

Diversification Opportunities for Global X and Defiance Silver

0.53

Correlation Coefficient

Global X  Defiance Silver

Very weak diversification

The 3 months correlation between Global and Defiance is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Global X Active and Defiance Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defiance Silver Corp 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 Active are associated (or correlated) with Defiance Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defiance Silver Corp has no effect on the direction of Global X i.e., Global X and Defiance Silver go up and down completely randomly.

Pair Corralation between Global X and Defiance Silver

Assuming the 90 days trading horizon Global X is expected to generate 4.75 times less return on investment than Defiance Silver. But when comparing it to its historical volatility, Global X Active is 12.89 times less risky than Defiance Silver. It trades about 0.05 of its potential returns per unit of risk. Defiance Silver Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  23.00  in Defiance Silver Corp on September 2, 2024 and sell it today you would lose (1.00) from holding Defiance Silver Corp or give up 4.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Global X Active  vs.  Defiance Silver Corp

Global X Active

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Active are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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.

Defiance Silver Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Defiance Silver Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Defiance Silver may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Global X and Defiance Silver

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

The idea behind Global X Active and Defiance Silver Corp 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.