Correlation Between TGIF and Global X

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

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

Diversification Opportunities for TGIF and Global X

0.69

Correlation Coefficient

TGIF  Global X

Poor diversification

The 3 months correlation between TGIF and Global is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding TGIF and Global X Nasdaq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Nasdaq and TGIF 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 TGIF 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 Nasdaq has no effect on the direction of TGIF i.e., TGIF and Global X go up and down completely randomly.

Pair Corralation between TGIF and Global X

Given the investment horizon of 90 days TGIF is expected to generate 4.52 times less return on investment than Global X. But when comparing it to its historical volatility, TGIF is 2.75 times less risky than Global X. It trades about 0.07 of its potential returns per unit of risk. Global X Nasdaq is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,758  in Global X Nasdaq on October 11, 2024 and sell it today you would earn a total of  1,071  from holding Global X Nasdaq or generate 60.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	25.6%
Values	Daily Returns

TGIF  vs.  Global X Nasdaq

TGIF

Risk-Adjusted Performance

0 of 100

Very Weak

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

Global X Nasdaq

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Nasdaq are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Global X is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TGIF and Global X

The main advantage of trading using opposite TGIF and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TGIF 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 TGIF and Global X Nasdaq 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.