Correlation Between Picton Mahoney and Global X

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

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

Diversification Opportunities for Picton Mahoney and Global X

0.9

Correlation Coefficient

Picton Mahoney  Global X

Almost no diversification

The 3 months correlation between Picton and Global is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Picton Mahoney Fortified and Global X Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Enhanced and Picton Mahoney 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 Picton Mahoney Fortified 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 Enhanced has no effect on the direction of Picton Mahoney i.e., Picton Mahoney and Global X go up and down completely randomly.

Pair Corralation between Picton Mahoney and Global X

Assuming the 90 days trading horizon Picton Mahoney Fortified is expected to generate 0.59 times more return on investment than Global X. However, Picton Mahoney Fortified is 1.7 times less risky than Global X. It trades about -0.02 of its potential returns per unit of risk. Global X Enhanced is currently generating about -0.09 per unit of risk. If you would invest  1,863  in Picton Mahoney Fortified on December 22, 2024 and sell it today you would lose (23.00) from holding Picton Mahoney Fortified or give up 1.23% of portfolio value over 90 days.

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

Picton Mahoney Fortified  vs.  Global X Enhanced

Picton Mahoney Fortified

Risk-Adjusted Performance

Very Weak

Over the last 90 days Picton Mahoney Fortified has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Picton Mahoney is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Global X Enhanced

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global X Enhanced has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with Picton Mahoney and Global X

The main advantage of trading using opposite Picton Mahoney and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Picton Mahoney 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 Picton Mahoney Fortified and Global X Enhanced 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.