Correlation Between Vident International and Global X

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

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

Diversification Opportunities for Vident International and Global X

0.92

Correlation Coefficient

Vident International  Global X

Almost no diversification

The 3 months correlation between Vident and Global is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Vident International Equity and Global X MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X MSCI and Vident International 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 Vident International Equity 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 MSCI has no effect on the direction of Vident International i.e., Vident International and Global X go up and down completely randomly.

Pair Corralation between Vident International and Global X

Given the investment horizon of 90 days Vident International Equity is expected to generate 0.9 times more return on investment than Global X. However, Vident International Equity is 1.11 times less risky than Global X. It trades about 0.06 of its potential returns per unit of risk. Global X MSCI is currently generating about 0.04 per unit of risk. If you would invest  2,052  in Vident International Equity on September 17, 2024 and sell it today you would earn a total of  561.00  from holding Vident International Equity or generate 27.34% return on investment over 90 days.

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

Vident International Equity  vs.  Global X MSCI

Vident International

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vident International Equity are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, Vident International is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Global X MSCI

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global X MSCI are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Global X is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Vident International and Global X

The main advantage of trading using opposite Vident International and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vident International 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 Vident International Equity and Global X MSCI 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.