Correlation Between Global X and Global X

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

Diversification Opportunities for Global X and Global X

0.25

Correlation Coefficient

Global X  Global X

Modest diversification

The 3 months correlation between Global and Global is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Global X AgTech and Global X Renewable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Renewable 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 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 Renewable has no effect on the direction of Global X i.e., Global X and Global X go up and down completely randomly.

Pair Corralation between Global X and Global X

Given the investment horizon of 90 days Global X AgTech is expected to generate 0.87 times more return on investment than Global X. However, Global X AgTech is 1.15 times less risky than Global X. It trades about 0.03 of its potential returns per unit of risk. Global X Renewable is currently generating about -0.22 per unit of risk. If you would invest  1,014  in Global X AgTech on September 13, 2024 and sell it today you would earn a total of  17.00  from holding Global X AgTech or generate 1.68% return on investment over 90 days.

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

Global X AgTech  vs.  Global X Renewable

Global X AgTech

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global X AgTech are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Global X Renewable

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X Renewable has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Etf's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the Exchange Traded Fund stockholders.

Pair Trading with Global X and Global X

The main advantage of trading using opposite Global X and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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 Global X AgTech and Global X Renewable 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.