Correlation Between MAHLE Metal and Global X

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

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

Diversification Opportunities for MAHLE Metal and Global X

-0.77

Correlation Coefficient

MAHLE Metal  Global X

Pay attention - limited upside

The 3 months correlation between MAHLE and Global is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding MAHLE Metal Leve 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 MAHLE Metal 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 MAHLE Metal Leve 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 MAHLE Metal i.e., MAHLE Metal and Global X go up and down completely randomly.

Pair Corralation between MAHLE Metal and Global X

Assuming the 90 days trading horizon MAHLE Metal Leve is expected to under-perform the Global X. But the stock apears to be less risky and, when comparing its historical volatility, MAHLE Metal Leve is 1.02 times less risky than Global X. The stock trades about -0.06 of its potential returns per unit of risk. The Global X Funds is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  4,120  in Global X Funds on September 5, 2024 and sell it today you would earn a total of  1,035  from holding Global X Funds or generate 25.12% return on investment over 90 days.

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

MAHLE Metal Leve  vs.  Global X Funds

MAHLE Metal Leve

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MAHLE Metal Leve has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Global X Funds

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Global X sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MAHLE Metal and Global X

The main advantage of trading using opposite MAHLE Metal and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAHLE Metal 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 MAHLE Metal Leve 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.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.