Correlation Between TRON and Global X

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

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

Diversification Opportunities for TRON and Global X

-0.6

Correlation Coefficient

TRON  Global X

Excellent diversification

The 3 months correlation between TRON and Global is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding TRON and Global X Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Copper and TRON 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 TRON 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 Copper has no effect on the direction of TRON i.e., TRON and Global X go up and down completely randomly.

Pair Corralation between TRON and Global X

Assuming the 90 days trading horizon TRON is expected to under-perform the Global X. In addition to that, TRON is 2.58 times more volatile than Global X Copper. It trades about -0.25 of its total potential returns per unit of risk. Global X Copper is currently generating about -0.25 per unit of volatility. If you would invest  4,261  in Global X Copper on October 12, 2024 and sell it today you would lose (317.00) from holding Global X Copper or give up 7.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

TRON  vs.  Global X Copper

TRON

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TRON are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, TRON exhibited solid returns over the last few months and may actually be approaching a breakup point.

Global X Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X Copper has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Pair Trading with TRON and Global X

The main advantage of trading using opposite TRON and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRON 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 TRON and Global X Copper 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.