Correlation Between SPASX Dividend and Global X

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

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

Diversification Opportunities for SPASX Dividend and Global X

-0.03

Correlation Coefficient

SPASX Dividend  Global X

Good diversification

The 3 months correlation between SPASX and Global is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding SPASX Dividend Opportunities and Global X Nasdaq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Nasdaq and SPASX Dividend 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 SPASX Dividend Opportunities 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 Nasdaq has no effect on the direction of SPASX Dividend i.e., SPASX Dividend and Global X go up and down completely randomly.

Pair Corralation between SPASX Dividend and Global X

Assuming the 90 days trading horizon SPASX Dividend is expected to generate 5.3 times less return on investment than Global X. But when comparing it to its historical volatility, SPASX Dividend Opportunities is 1.23 times less risky than Global X. It trades about 0.02 of its potential returns per unit of risk. Global X Nasdaq is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  832.00  in Global X Nasdaq on September 28, 2024 and sell it today you would earn a total of  451.00  from holding Global X Nasdaq or generate 54.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.4%
Values	Daily Returns

SPASX Dividend Opportunities  vs.  Global X Nasdaq

Pair Trading with SPASX Dividend and Global X

The main advantage of trading using opposite SPASX Dividend and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPASX Dividend 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 SPASX Dividend Opportunities and Global X Nasdaq 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.