Correlation Between Roundhill Sports and Global X

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

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

Diversification Opportunities for Roundhill Sports and Global X

0.53

Correlation Coefficient

Roundhill Sports  Global X

Very weak diversification

The 3 months correlation between Roundhill and Global is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Roundhill Sports Betting and Global X Video in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Video and Roundhill Sports 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 Roundhill Sports Betting 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 Video has no effect on the direction of Roundhill Sports i.e., Roundhill Sports and Global X go up and down completely randomly.

Pair Corralation between Roundhill Sports and Global X

Given the investment horizon of 90 days Roundhill Sports Betting is expected to generate 0.71 times more return on investment than Global X. However, Roundhill Sports Betting is 1.4 times less risky than Global X. It trades about 0.25 of its potential returns per unit of risk. Global X Video is currently generating about 0.12 per unit of risk. If you would invest  1,756  in Roundhill Sports Betting on September 2, 2024 and sell it today you would earn a total of  295.00  from holding Roundhill Sports Betting or generate 16.8% return on investment over 90 days.

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

Roundhill Sports Betting  vs.  Global X Video

Roundhill Sports Betting

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Roundhill Sports Betting are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Roundhill Sports showed solid returns over the last few months and may actually be approaching a breakup point.

Global X Video

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Video are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Roundhill Sports and Global X

The main advantage of trading using opposite Roundhill Sports and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roundhill Sports 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 Roundhill Sports Betting and Global X Video 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.