Correlation Between Virtus ETF and Global X

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

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

Diversification Opportunities for Virtus ETF and Global X

0.5

Correlation Coefficient

Virtus ETF  Global X

Very weak diversification

The 3 months correlation between Virtus and Global is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Virtus ETF Trust and Global X Thematic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Thematic and Virtus ETF 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 Virtus ETF Trust 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 Thematic has no effect on the direction of Virtus ETF i.e., Virtus ETF and Global X go up and down completely randomly.

Pair Corralation between Virtus ETF and Global X

Given the investment horizon of 90 days Virtus ETF Trust is expected to generate 0.63 times more return on investment than Global X. However, Virtus ETF Trust is 1.59 times less risky than Global X. It trades about 0.13 of its potential returns per unit of risk. Global X Thematic is currently generating about 0.01 per unit of risk. If you would invest  2,773  in Virtus ETF Trust on September 17, 2024 and sell it today you would earn a total of  1,223  from holding Virtus ETF Trust or generate 44.1% return on investment over 90 days.

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

Virtus ETF Trust  vs.  Global X Thematic

Virtus ETF Trust

Risk-Adjusted Performance

14 of 100

Good

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

Global X Thematic

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Thematic are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Global X is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Virtus ETF and Global X

The main advantage of trading using opposite Virtus ETF and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus ETF 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 Virtus ETF Trust and Global X Thematic 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.