Correlation Between DSJA and Global X

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

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

Diversification Opportunities for DSJA and Global X

-0.62

Correlation Coefficient

DSJA  Global X

Excellent diversification

The 3 months correlation between DSJA and Global is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding DSJA and Global X Psychedelic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Psychedelic and DSJA 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 DSJA 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 Psychedelic has no effect on the direction of DSJA i.e., DSJA and Global X go up and down completely randomly.

Pair Corralation between DSJA and Global X

Given the investment horizon of 90 days DSJA is expected to generate 2.77 times less return on investment than Global X. But when comparing it to its historical volatility, DSJA is 12.16 times less risky than Global X. It trades about 0.2 of its potential returns per unit of risk. Global X Psychedelic is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  559.00  in Global X Psychedelic on September 25, 2024 and sell it today you would earn a total of  11.00  from holding Global X Psychedelic or generate 1.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	26.62%
Values	Daily Returns

DSJA  vs.  Global X Psychedelic

DSJA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DSJA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking indicators, DSJA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Global X Psychedelic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X Psychedelic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Global X is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with DSJA and Global X

The main advantage of trading using opposite DSJA and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DSJA 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 DSJA and Global X Psychedelic 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.