Correlation Between Global X and Advisors Inner

Can any of the company-specific risk be diversified away by investing in both Global X and Advisors Inner 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 Advisors Inner 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 The Advisors Inner, you can compare the effects of market volatilities on Global X and Advisors Inner 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 Advisors Inner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Advisors Inner.

Diversification Opportunities for Global X and Advisors Inner

-0.19

Correlation Coefficient

Global X  Advisors Inner

Good diversification

The 3 months correlation between Global and Advisors is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Global X SP and The Advisors Inner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advisors Inner 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 Advisors Inner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advisors Inner has no effect on the direction of Global X i.e., Global X and Advisors Inner go up and down completely randomly.

Pair Corralation between Global X and Advisors Inner

Given the investment horizon of 90 days Global X SP is expected to under-perform the Advisors Inner. In addition to that, Global X is 1.18 times more volatile than The Advisors Inner. It trades about -0.08 of its total potential returns per unit of risk. The Advisors Inner is currently generating about 0.11 per unit of volatility. If you would invest  2,468  in The Advisors Inner on December 29, 2024 and sell it today you would earn a total of  111.00  from holding The Advisors Inner or generate 4.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Global X SP  vs.  The Advisors Inner

Global X SP

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global X SP has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Advisors Inner

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Advisors Inner are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Advisors Inner is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Global X and Advisors Inner

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

The idea behind Global X SP and The Advisors Inner 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.