Correlation Between Global X and Dimensional Global

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

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

Diversification Opportunities for Global X and Dimensional Global

0.81

Correlation Coefficient

Global X  Dimensional Global

Very poor diversification

The 3 months correlation between Global and Dimensional is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Global X Hydrogen and Dimensional Global Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional Global Core 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 Hydrogen are associated (or correlated) with Dimensional Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional Global Core has no effect on the direction of Global X i.e., Global X and Dimensional Global go up and down completely randomly.

Pair Corralation between Global X and Dimensional Global

Assuming the 90 days trading horizon Global X Hydrogen is expected to generate 3.71 times more return on investment than Dimensional Global. However, Global X is 3.71 times more volatile than Dimensional Global Core. It trades about 0.15 of its potential returns per unit of risk. Dimensional Global Core is currently generating about 0.19 per unit of risk. If you would invest  442.00  in Global X Hydrogen on October 10, 2024 and sell it today you would earn a total of  102.00  from holding Global X Hydrogen or generate 23.08% return on investment over 90 days.

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

Global X Hydrogen  vs.  Dimensional Global Core

Global X Hydrogen

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Hydrogen are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Global X unveiled solid returns over the last few months and may actually be approaching a breakup point.

Dimensional Global Core

Risk-Adjusted Performance

14 of 100

Good

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

Pair Trading with Global X and Dimensional Global

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

The idea behind Global X Hydrogen and Dimensional Global Core 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.