Correlation Between Global X and Cabana Target

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

Diversification Opportunities for Global X and Cabana Target

0.81

Correlation Coefficient

Global X  Cabana Target

Very poor diversification

The 3 months correlation between Global and Cabana is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Global X PropTech and Cabana Target Drawdown in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabana Target Drawdown 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 Cabana Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabana Target Drawdown has no effect on the direction of Global X i.e., Global X and Cabana Target go up and down completely randomly.

Pair Corralation between Global X and Cabana Target

Given the investment horizon of 90 days Global X PropTech is expected to generate 1.94 times more return on investment than Cabana Target. However, Global X is 1.94 times more volatile than Cabana Target Drawdown. It trades about 0.04 of its potential returns per unit of risk. Cabana Target Drawdown is currently generating about 0.05 per unit of risk. If you would invest  3,325  in Global X PropTech on December 28, 2024 and sell it today you would earn a total of  93.00  from holding Global X PropTech or generate 2.8% return on investment over 90 days.

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

Global X PropTech  vs.  Cabana Target Drawdown

Global X PropTech

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global X PropTech are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Cabana Target Drawdown

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cabana Target Drawdown are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Cabana Target 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 Cabana Target

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

The idea behind Global X PropTech and Cabana Target Drawdown 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.