Correlation Between Global X and ZEGA Buy

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

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

Diversification Opportunities for Global X and ZEGA Buy

0.94

Correlation Coefficient

Global X  ZEGA Buy

Almost no diversification

The 3 months correlation between Global and ZEGA is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Global X Russell and ZEGA Buy and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZEGA Buy 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 Russell are associated (or correlated) with ZEGA Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZEGA Buy has no effect on the direction of Global X i.e., Global X and ZEGA Buy go up and down completely randomly.

Pair Corralation between Global X and ZEGA Buy

Given the investment horizon of 90 days Global X Russell is expected to generate 1.17 times more return on investment than ZEGA Buy. However, Global X is 1.17 times more volatile than ZEGA Buy and. It trades about -0.06 of its potential returns per unit of risk. ZEGA Buy and is currently generating about -0.08 per unit of risk. If you would invest  1,583  in Global X Russell on December 28, 2024 and sell it today you would lose (53.00) from holding Global X Russell or give up 3.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

Global X Russell  vs.  ZEGA Buy and

Global X Russell

Risk-Adjusted Performance

Very Weak

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

ZEGA Buy

Risk-Adjusted Performance

Very Weak

Over the last 90 days ZEGA Buy and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, ZEGA Buy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Global X and ZEGA Buy

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

The idea behind Global X Russell and ZEGA Buy and 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.