Correlation Between Global X and VanEck Green

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

By analyzing existing cross correlation between Global X Cybersecurity and VanEck Green Infrastructure, you can compare the effects of market volatilities on Global X and VanEck Green 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 VanEck Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and VanEck Green.

Diversification Opportunities for Global X and VanEck Green

0.71

Correlation Coefficient

Global X  VanEck Green

Poor diversification

The 3 months correlation between Global and VanEck is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Global X Cybersecurity and VanEck Green Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Green Infrast 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 Cybersecurity are associated (or correlated) with VanEck Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Green Infrast has no effect on the direction of Global X i.e., Global X and VanEck Green go up and down completely randomly.

Pair Corralation between Global X and VanEck Green

Considering the 90-day investment horizon Global X Cybersecurity is expected to generate 1.17 times more return on investment than VanEck Green. However, Global X is 1.17 times more volatile than VanEck Green Infrastructure. It trades about 0.08 of its potential returns per unit of risk. VanEck Green Infrastructure is currently generating about 0.02 per unit of risk. If you would invest  3,070  in Global X Cybersecurity on September 22, 2024 and sell it today you would earn a total of  198.00  from holding Global X Cybersecurity or generate 6.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Global X Cybersecurity  vs.  VanEck Green Infrastructure

Global X Cybersecurity

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Cybersecurity are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in January 2025.

VanEck Green Infrast

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Green Infrastructure are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical and fundamental indicators, VanEck Green is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Global X and VanEck Green

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

The idea behind Global X Cybersecurity and VanEck Green Infrastructure 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.