Correlation Between Global X and ProShares Metaverse

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

Diversification Opportunities for Global X and ProShares Metaverse

0.82

Correlation Coefficient

Global X  ProShares Metaverse

Very poor diversification

The 3 months correlation between Global and ProShares is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Global X Cybersecurity and ProShares Metaverse ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Metaverse ETF 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 ProShares Metaverse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Metaverse ETF has no effect on the direction of Global X i.e., Global X and ProShares Metaverse go up and down completely randomly.

Pair Corralation between Global X and ProShares Metaverse

Considering the 90-day investment horizon Global X is expected to generate 1.14 times less return on investment than ProShares Metaverse. But when comparing it to its historical volatility, Global X Cybersecurity is 1.01 times less risky than ProShares Metaverse. It trades about 0.18 of its potential returns per unit of risk. ProShares Metaverse ETF is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  4,126  in ProShares Metaverse ETF on September 5, 2024 and sell it today you would earn a total of  669.00  from holding ProShares Metaverse ETF or generate 16.21% return on investment over 90 days.

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

Global X Cybersecurity  vs.  ProShares Metaverse ETF

Global X Cybersecurity

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Cybersecurity are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Global X reported solid returns over the last few months and may actually be approaching a breakup point.

ProShares Metaverse ETF

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Metaverse ETF are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, ProShares Metaverse unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global X and ProShares Metaverse

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

The idea behind Global X Cybersecurity and ProShares Metaverse ETF 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.