Correlation Between Formidable Fortress and Global X

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

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

Diversification Opportunities for Formidable Fortress and Global X

0.81

Correlation Coefficient

Formidable Fortress  Global X

Very poor diversification

The 3 months correlation between Formidable and Global is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Formidable Fortress ETF and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds and Formidable Fortress 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 Formidable Fortress ETF 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 Funds has no effect on the direction of Formidable Fortress i.e., Formidable Fortress and Global X go up and down completely randomly.

Pair Corralation between Formidable Fortress and Global X

Given the investment horizon of 90 days Formidable Fortress ETF is expected to under-perform the Global X. But the etf apears to be less risky and, when comparing its historical volatility, Formidable Fortress ETF is 1.65 times less risky than Global X. The etf trades about -0.05 of its potential returns per unit of risk. The Global X Funds is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  3,833  in Global X Funds on September 23, 2024 and sell it today you would lose (58.00) from holding Global X Funds or give up 1.51% of portfolio value over 90 days.

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

Formidable Fortress ETF  vs.  Global X Funds

Formidable Fortress ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Formidable Fortress ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Formidable Fortress is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Global X Funds

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Global X is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Formidable Fortress and Global X

The main advantage of trading using opposite Formidable Fortress and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formidable Fortress 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 Formidable Fortress ETF and Global X Funds 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.