Correlation Between SPDR SP and Global X

Can any of the company-specific risk be diversified away by investing in both SPDR SP 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 SP 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 SP Metals and Global X Uranium, you can compare the effects of market volatilities on SPDR SP 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 SP with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Global X.

Diversification Opportunities for SPDR SP and Global X

0.9

Correlation Coefficient

SPDR SP  Global X

Almost no diversification

The 3 months correlation between SPDR and Global is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Metals and Global X Uranium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Uranium and SPDR SP 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 SP Metals 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 Uranium has no effect on the direction of SPDR SP i.e., SPDR SP and Global X go up and down completely randomly.

Pair Corralation between SPDR SP and Global X

Considering the 90-day investment horizon SPDR SP Metals is expected to under-perform the Global X. But the etf apears to be less risky and, when comparing its historical volatility, SPDR SP Metals is 1.71 times less risky than Global X. The etf trades about -0.19 of its potential returns per unit of risk. The Global X Uranium is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,052  in Global X Uranium on September 12, 2024 and sell it today you would earn a total of  33.00  from holding Global X Uranium or generate 1.08% return on investment over 90 days.

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

SPDR SP Metals  vs.  Global X Uranium

SPDR SP Metals

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP Metals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, SPDR SP exhibited solid returns over the last few months and may actually be approaching a breakup point.

Global X Uranium

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Uranium are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Global X sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPDR SP and Global X

The main advantage of trading using opposite SPDR SP and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP 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 SP Metals and Global X Uranium 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.