Correlation Between Snowflake and Global X

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

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

Diversification Opportunities for Snowflake and Global X

0.59

Correlation Coefficient

Snowflake  Global X

Very weak diversification

The 3 months correlation between Snowflake and Global is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Snowflake and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds and Snowflake 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 Snowflake 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 Funds has no effect on the direction of Snowflake i.e., Snowflake and Global X go up and down completely randomly.

Pair Corralation between Snowflake and Global X

Assuming the 90 days trading horizon Snowflake is expected to generate 1.05 times less return on investment than Global X. In addition to that, Snowflake is 2.4 times more volatile than Global X Funds. It trades about 0.03 of its total potential returns per unit of risk. Global X Funds is currently generating about 0.07 per unit of volatility. If you would invest  3,102  in Global X Funds on October 23, 2024 and sell it today you would earn a total of  1,846  from holding Global X Funds or generate 59.51% return on investment over 90 days.

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

Snowflake  vs.  Global X Funds

Snowflake

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Snowflake are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Snowflake sustained solid returns over the last few months and may actually be approaching a breakup point.

Global X Funds

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Global X sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Snowflake and Global X

The main advantage of trading using opposite Snowflake and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snowflake 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 Snowflake and Global X Funds 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.