Correlation Between Main Thematic and Global X

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

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

Diversification Opportunities for Main Thematic and Global X

0.5

Correlation Coefficient

Main Thematic  Global X

Very weak diversification

The 3 months correlation between Main and Global is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Main Thematic Innovation and Global X CleanTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X CleanTech and Main Thematic 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 Main Thematic Innovation 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 CleanTech has no effect on the direction of Main Thematic i.e., Main Thematic and Global X go up and down completely randomly.

Pair Corralation between Main Thematic and Global X

Given the investment horizon of 90 days Main Thematic Innovation is expected to under-perform the Global X. In addition to that, Main Thematic is 1.13 times more volatile than Global X CleanTech. It trades about -0.08 of its total potential returns per unit of risk. Global X CleanTech is currently generating about -0.06 per unit of volatility. If you would invest  692.00  in Global X CleanTech on December 28, 2024 and sell it today you would lose (62.00) from holding Global X CleanTech or give up 8.96% of portfolio value over 90 days.

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

Main Thematic Innovation  vs.  Global X CleanTech

Main Thematic Innovation

Risk-Adjusted Performance

Very Weak

Over the last 90 days Main Thematic Innovation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Global X CleanTech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global X CleanTech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with Main Thematic and Global X

The main advantage of trading using opposite Main Thematic and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Thematic 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 Main Thematic Innovation and Global X CleanTech 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.