Correlation Between Real Estate and Global X

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

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

Diversification Opportunities for Real Estate and Global X

0.55

Correlation Coefficient

Real Estate  Global X

Very weak diversification

The 3 months correlation between Real and Global is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding The Real Estate and Global X Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Data and Real Estate 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 The Real Estate 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 Data has no effect on the direction of Real Estate i.e., Real Estate and Global X go up and down completely randomly.

Pair Corralation between Real Estate and Global X

Given the investment horizon of 90 days Real Estate is expected to generate 1.45 times less return on investment than Global X. But when comparing it to its historical volatility, The Real Estate is 2.52 times less risky than Global X. It trades about 0.41 of its potential returns per unit of risk. Global X Data is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,643  in Global X Data on December 4, 2024 and sell it today you would earn a total of  123.00  from holding Global X Data or generate 7.49% return on investment over 90 days.

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

The Real Estate  vs.  Global X Data

Real Estate

Risk-Adjusted Performance

Very Weak

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

Global X Data

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Data are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Global X is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Real Estate and Global X

The main advantage of trading using opposite Real Estate and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Real Estate 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 The Real Estate and Global X Data 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.

Check out your portfolio center.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.