Correlation Between Global X and Xtrackers California

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

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

Diversification Opportunities for Global X and Xtrackers California

-0.04

Correlation Coefficient

Global X  Xtrackers California

Good diversification

The 3 months correlation between Global and Xtrackers is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds and Xtrackers California Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers California 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 Funds are associated (or correlated) with Xtrackers California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers California has no effect on the direction of Global X i.e., Global X and Xtrackers California go up and down completely randomly.

Pair Corralation between Global X and Xtrackers California

Given the investment horizon of 90 days Global X Funds is expected to under-perform the Xtrackers California. In addition to that, Global X is 3.23 times more volatile than Xtrackers California Municipal. It trades about -0.23 of its total potential returns per unit of risk. Xtrackers California Municipal is currently generating about -0.11 per unit of volatility. If you would invest  2,517  in Xtrackers California Municipal on September 23, 2024 and sell it today you would lose (19.00) from holding Xtrackers California Municipal or give up 0.75% of portfolio value over 90 days.

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

Global X Funds  vs.  Xtrackers California Municipal

Global X Funds

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Global X is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Xtrackers California

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtrackers California Municipal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Xtrackers California is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Global X and Xtrackers California

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

The idea behind Global X Funds and Xtrackers California Municipal 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.