Correlation Between Real Estate and Global X

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

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

Diversification Opportunities for Real Estate and Global X

-0.7

Correlation Coefficient

Real Estate  Global X

Excellent diversification

The 3 months correlation between Real and Global is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Real Estate E Commerce and Global X Pipelines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Pipelines and Real Estate 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 Real Estate E Commerce 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 Pipelines has no effect on the direction of Real Estate i.e., Real Estate and Global X go up and down completely randomly.

Pair Corralation between Real Estate and Global X

Assuming the 90 days horizon Real Estate E Commerce is expected to under-perform the Global X. In addition to that, Real Estate is 1.13 times more volatile than Global X Pipelines. It trades about -0.16 of its total potential returns per unit of risk. Global X Pipelines is currently generating about -0.03 per unit of volatility. If you would invest  1,188  in Global X Pipelines on October 11, 2024 and sell it today you would lose (9.00) from holding Global X Pipelines or give up 0.76% of portfolio value over 90 days.

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

Real Estate E Commerce  vs.  Global X Pipelines

Real Estate E

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Real Estate E Commerce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Global X Pipelines

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Pipelines are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Real Estate and Global X

The main advantage of trading using opposite Real Estate and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Real Estate 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 Real Estate E Commerce and Global X Pipelines 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 Commodity Directory module to find actively traded commodities issued by global exchanges.