Correlation Between Global X and Desjardins American

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

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

Diversification Opportunities for Global X and Desjardins American

-0.44

Correlation Coefficient

Global X  Desjardins American

Very good diversification

The 3 months correlation between Global and Desjardins is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Global X SPTSX and Desjardins American Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desjardins American 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 SPTSX are associated (or correlated) with Desjardins American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desjardins American has no effect on the direction of Global X i.e., Global X and Desjardins American go up and down completely randomly.

Pair Corralation between Global X and Desjardins American

Assuming the 90 days trading horizon Global X SPTSX is expected to under-perform the Desjardins American. In addition to that, Global X is 1.74 times more volatile than Desjardins American Equity. It trades about -0.03 of its total potential returns per unit of risk. Desjardins American Equity is currently generating about 0.17 per unit of volatility. If you would invest  2,281  in Desjardins American Equity on October 10, 2024 and sell it today you would earn a total of  177.00  from holding Desjardins American Equity or generate 7.76% return on investment over 90 days.

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

Global X SPTSX  vs.  Desjardins American Equity

Global X SPTSX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X SPTSX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Global X is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Desjardins American

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Desjardins American Equity are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Desjardins American may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Global X and Desjardins American

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

The idea behind Global X SPTSX and Desjardins American Equity 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.