Correlation Between Global X and FT Vest

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

Diversification Opportunities for Global X and FT Vest

0.83

Correlation Coefficient

Global X  FT Vest

Very poor diversification

The 3 months correlation between Global and TDVI is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Global X SP and FT Vest Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Vest Technology 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 FT Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Vest Technology has no effect on the direction of Global X i.e., Global X and FT Vest go up and down completely randomly.

Pair Corralation between Global X and FT Vest

Given the investment horizon of 90 days Global X SP is expected to generate 0.56 times more return on investment than FT Vest. However, Global X SP is 1.77 times less risky than FT Vest. It trades about -0.06 of its potential returns per unit of risk. FT Vest Technology is currently generating about -0.05 per unit of risk. If you would invest  4,088  in Global X SP on December 28, 2024 and sell it today you would lose (121.00) from holding Global X SP or give up 2.96% of portfolio value over 90 days.

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

Global X SP  vs.  FT Vest Technology

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.

FT Vest Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days FT Vest Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, FT Vest is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Global X and FT Vest

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

The idea behind Global X SP and FT Vest Technology 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.