Correlation Between Roundhill Video and Global X

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

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

Diversification Opportunities for Roundhill Video and Global X

0.96

Correlation Coefficient

Roundhill Video  Global X

Almost no diversification

The 3 months correlation between Roundhill and Global is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Roundhill Video Games and Global X Millennials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Millennials and Roundhill Video 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 Roundhill Video Games 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 Millennials has no effect on the direction of Roundhill Video i.e., Roundhill Video and Global X go up and down completely randomly.

Pair Corralation between Roundhill Video and Global X

Given the investment horizon of 90 days Roundhill Video is expected to generate 1.03 times less return on investment than Global X. In addition to that, Roundhill Video is 1.24 times more volatile than Global X Millennials. It trades about 0.1 of its total potential returns per unit of risk. Global X Millennials is currently generating about 0.13 per unit of volatility. If you would invest  3,269  in Global X Millennials on September 23, 2024 and sell it today you would earn a total of  1,309  from holding Global X Millennials or generate 40.04% return on investment over 90 days.

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

Roundhill Video Games  vs.  Global X Millennials

Roundhill Video Games

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Roundhill Video Games are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Roundhill Video exhibited solid returns over the last few months and may actually be approaching a breakup point.

Global X Millennials

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Millennials are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile essential indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Roundhill Video and Global X

The main advantage of trading using opposite Roundhill Video and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roundhill Video 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 Roundhill Video Games and Global X Millennials 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.