Correlation Between Global X and Guardian

Can any of the company-specific risk be diversified away by investing in both Global X and Guardian 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 Guardian 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 Guardian i3 Quality, you can compare the effects of market volatilities on Global X and Guardian 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 Guardian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Guardian.

Diversification Opportunities for Global X and Guardian

-0.62

Correlation Coefficient

Global X  Guardian

Excellent diversification

The 3 months correlation between Global and Guardian is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Global X SPTSX and Guardian i3 Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian i3 Quality 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 Guardian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian i3 Quality has no effect on the direction of Global X i.e., Global X and Guardian go up and down completely randomly.

Pair Corralation between Global X and Guardian

Assuming the 90 days trading horizon Global X SPTSX is expected to generate 0.85 times more return on investment than Guardian. However, Global X SPTSX is 1.18 times less risky than Guardian. It trades about 0.17 of its potential returns per unit of risk. Guardian i3 Quality is currently generating about 0.04 per unit of risk. If you would invest  3,622  in Global X SPTSX on October 10, 2024 and sell it today you would earn a total of  134.00  from holding Global X SPTSX or generate 3.7% return on investment over 90 days.

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

Global X SPTSX  vs.  Guardian i3 Quality

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.

Guardian i3 Quality

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guardian i3 Quality are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Guardian may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Global X and Guardian

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

The idea behind Global X SPTSX and Guardian i3 Quality 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 CEOs Directory module to screen CEOs from public companies around the world.