Correlation Between BetaPro SP and Global X

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

By analyzing existing cross correlation between BetaPro SP 500 and Global X Emerging, you can compare the effects of market volatilities on BetaPro SP 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 BetaPro SP with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro SP and Global X.

Diversification Opportunities for BetaPro SP and Global X

-0.49

Correlation Coefficient

BetaPro SP  Global X

Very good diversification

The 3 months correlation between BetaPro and Global is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro SP 500 and Global X Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Emerging and BetaPro SP 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 BetaPro SP 500 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 Emerging has no effect on the direction of BetaPro SP i.e., BetaPro SP and Global X go up and down completely randomly.

Pair Corralation between BetaPro SP and Global X

Assuming the 90 days trading horizon BetaPro SP 500 is expected to under-perform the Global X. But the etf apears to be less risky and, when comparing its historical volatility, BetaPro SP 500 is 1.47 times less risky than Global X. The etf trades about -0.18 of its potential returns per unit of risk. The Global X Emerging is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,574  in Global X Emerging on September 4, 2024 and sell it today you would earn a total of  181.00  from holding Global X Emerging or generate 5.06% return on investment over 90 days.

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

BetaPro SP 500  vs.  Global X Emerging

BetaPro SP 500

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BetaPro SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Global X Emerging

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Emerging are ranked lower than 6 (%) 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.

Pair Trading with BetaPro SP and Global X

The main advantage of trading using opposite BetaPro SP and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro SP 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 BetaPro SP 500 and Global X Emerging 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.