Correlation Between Global X and 1st Source

Can any of the company-specific risk be diversified away by investing in both Global X and 1st Source 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 1st Source into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global X PropTech and 1st Source, you can compare the effects of market volatilities on Global X and 1st Source 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 1st Source. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and 1st Source.

Diversification Opportunities for Global X and 1st Source

0.92

Correlation Coefficient

Global X  1st Source

Almost no diversification

The 3 months correlation between Global and 1st is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Global X PropTech and 1st Source in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1st Source 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 PropTech are associated (or correlated) with 1st Source. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1st Source has no effect on the direction of Global X i.e., Global X and 1st Source go up and down completely randomly.

Pair Corralation between Global X and 1st Source

Given the investment horizon of 90 days Global X PropTech is expected to generate 0.61 times more return on investment than 1st Source. However, Global X PropTech is 1.65 times less risky than 1st Source. It trades about 0.1 of its potential returns per unit of risk. 1st Source is currently generating about 0.04 per unit of risk. If you would invest  3,111  in Global X PropTech on December 1, 2024 and sell it today you would earn a total of  477.00  from holding Global X PropTech or generate 15.33% return on investment over 90 days.

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

Global X PropTech  vs.  1st Source

Global X PropTech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global X PropTech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Global X is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

1st Source

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in 1st Source are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, 1st Source is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Global X and 1st Source

The main advantage of trading using opposite Global X and 1st Source positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, 1st Source 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 1st Source will offset losses from the drop in 1st Source's long position.

The idea behind Global X PropTech and 1st Source 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.