Correlation Between Global X and Main Buywrite

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

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

Diversification Opportunities for Global X and Main Buywrite

0.8

Correlation Coefficient

Global X  Main Buywrite

Very poor diversification

The 3 months correlation between Global and Main is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Global X SP and Main Buywrite ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Main Buywrite ETF and Global X 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 Global X SP are associated (or correlated) with Main Buywrite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Main Buywrite ETF has no effect on the direction of Global X i.e., Global X and Main Buywrite go up and down completely randomly.

Pair Corralation between Global X and Main Buywrite

Given the investment horizon of 90 days Global X SP is expected to generate 1.53 times more return on investment than Main Buywrite. However, Global X is 1.53 times more volatile than Main Buywrite ETF. It trades about 0.23 of its potential returns per unit of risk. Main Buywrite ETF is currently generating about 0.16 per unit of risk. If you would invest  4,032  in Global X SP on September 13, 2024 and sell it today you would earn a total of  201.00  from holding Global X SP or generate 4.99% return on investment over 90 days.

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

Global X SP  vs.  Main Buywrite ETF

Global X SP

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X SP are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Global X is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Main Buywrite ETF

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Main Buywrite ETF are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Main Buywrite is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Global X and Main Buywrite

The main advantage of trading using opposite Global X and Main Buywrite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Main Buywrite 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 Main Buywrite will offset losses from the drop in Main Buywrite's long position.

The idea behind Global X SP and Main Buywrite ETF 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.