Correlation Between BFIT and Global X

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

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

Diversification Opportunities for BFIT and Global X

0.05

Correlation Coefficient

BFIT  Global X

Significant diversification

The 3 months correlation between BFIT and Global is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding BFIT and Global X E commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X E and BFIT 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 BFIT 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 E has no effect on the direction of BFIT i.e., BFIT and Global X go up and down completely randomly.

Pair Corralation between BFIT and Global X

If you would invest  2,471  in Global X E commerce on September 17, 2024 and sell it today you would earn a total of  472.61  from holding Global X E commerce or generate 19.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	3.08%
Values	Daily Returns

BFIT  vs.  Global X E commerce

BFIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BFIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, BFIT is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Global X E

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X E commerce are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating forward indicators, Global X showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BFIT and Global X

The main advantage of trading using opposite BFIT and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BFIT 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 BFIT and Global X E commerce 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 Transaction History module to view history of all your transactions and understand their impact on performance.