Correlation Between Global X and ALPS Emerging

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

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

Diversification Opportunities for Global X and ALPS Emerging

0.59

Correlation Coefficient

Global X  ALPS Emerging

Very weak diversification

The 3 months correlation between Global and ALPS is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Global X SuperDividend and ALPS Emerging Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALPS Emerging Sector 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 SuperDividend are associated (or correlated) with ALPS Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALPS Emerging Sector has no effect on the direction of Global X i.e., Global X and ALPS Emerging go up and down completely randomly.

Pair Corralation between Global X and ALPS Emerging

Given the investment horizon of 90 days Global X SuperDividend is expected to generate 1.25 times more return on investment than ALPS Emerging. However, Global X is 1.25 times more volatile than ALPS Emerging Sector. It trades about 0.15 of its potential returns per unit of risk. ALPS Emerging Sector is currently generating about 0.04 per unit of risk. If you would invest  1,976  in Global X SuperDividend on December 25, 2024 and sell it today you would earn a total of  154.00  from holding Global X SuperDividend or generate 7.79% return on investment over 90 days.

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

Global X SuperDividend  vs.  ALPS Emerging Sector

Global X SuperDividend

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X SuperDividend are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal technical and fundamental indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in April 2025.

ALPS Emerging Sector

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ALPS Emerging Sector are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ALPS Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Global X and ALPS Emerging

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

The idea behind Global X SuperDividend and ALPS Emerging Sector 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 Global Correlations module to find global opportunities by holding instruments from different markets.