Correlation Between Global X and Ecofin Global

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

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

Diversification Opportunities for Global X and Ecofin Global

0.24

Correlation Coefficient

Global X  Ecofin Global

Modest diversification

The 3 months correlation between Global and Ecofin is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Global X AgTech and Ecofin Global Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecofin Global Water 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 AgTech are associated (or correlated) with Ecofin Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecofin Global Water has no effect on the direction of Global X i.e., Global X and Ecofin Global go up and down completely randomly.

Pair Corralation between Global X and Ecofin Global

Given the investment horizon of 90 days Global X is expected to generate 54.3 times less return on investment than Ecofin Global. In addition to that, Global X is 1.13 times more volatile than Ecofin Global Water. It trades about 0.01 of its total potential returns per unit of risk. Ecofin Global Water is currently generating about 0.41 per unit of volatility. If you would invest  4,814  in Ecofin Global Water on September 14, 2024 and sell it today you would earn a total of  203.00  from holding Ecofin Global Water or generate 4.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	17.19%
Values	Daily Returns

Global X AgTech  vs.  Ecofin Global Water

Global X AgTech

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Global X AgTech has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Global X is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Ecofin Global Water

Risk-Adjusted Performance

0 of 100

Very Strong

Over the last 90 days Ecofin Global Water has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively abnormal essential indicators, Ecofin Global unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global X and Ecofin Global

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

The idea behind Global X AgTech and Ecofin Global Water 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.