Correlation Between SPDR Kensho and Global X

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

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

Diversification Opportunities for SPDR Kensho and Global X

0.87

Correlation Coefficient

SPDR Kensho  Global X

Very poor diversification

The 3 months correlation between SPDR and Global is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Kensho Intelligent and Global X Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Infrastructure and SPDR Kensho 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 SPDR Kensho Intelligent 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 Infrastructure has no effect on the direction of SPDR Kensho i.e., SPDR Kensho and Global X go up and down completely randomly.

Pair Corralation between SPDR Kensho and Global X

Given the investment horizon of 90 days SPDR Kensho Intelligent is expected to under-perform the Global X. But the etf apears to be less risky and, when comparing its historical volatility, SPDR Kensho Intelligent is 1.18 times less risky than Global X. The etf trades about -0.11 of its potential returns per unit of risk. The Global X Infrastructure is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  4,131  in Global X Infrastructure on December 26, 2024 and sell it today you would lose (244.00) from holding Global X Infrastructure or give up 5.91% of portfolio value over 90 days.

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

SPDR Kensho Intelligent  vs.  Global X Infrastructure

SPDR Kensho Intelligent

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPDR Kensho Intelligent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Etf's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the Etf traders.

Global X Infrastructure

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global X Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Global X is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SPDR Kensho and Global X

The main advantage of trading using opposite SPDR Kensho and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Kensho 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 SPDR Kensho Intelligent and Global X Infrastructure 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.