Correlation Between SPDR SPASX and Global X

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

By analyzing existing cross correlation between SPDR SPASX 200 and Global X Hydrogen, you can compare the effects of market volatilities on SPDR SPASX 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 SPDR SPASX with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SPASX and Global X.

Diversification Opportunities for SPDR SPASX and Global X

0.8

Correlation Coefficient

SPDR SPASX  Global X

Very poor diversification

The 3 months correlation between SPDR and Global is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SPASX 200 and Global X Hydrogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Hydrogen and SPDR SPASX 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 SPDR SPASX 200 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 Hydrogen has no effect on the direction of SPDR SPASX i.e., SPDR SPASX and Global X go up and down completely randomly.

Pair Corralation between SPDR SPASX and Global X

Assuming the 90 days trading horizon SPDR SPASX is expected to generate 5.69 times less return on investment than Global X. But when comparing it to its historical volatility, SPDR SPASX 200 is 3.94 times less risky than Global X. It trades about 0.08 of its potential returns per unit of risk. Global X Hydrogen is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  432.00  in Global X Hydrogen on September 12, 2024 and sell it today you would earn a total of  72.00  from holding Global X Hydrogen or generate 16.67% return on investment over 90 days.

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

SPDR SPASX 200  vs.  Global X Hydrogen

SPDR SPASX 200

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SPASX 200 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SPDR SPASX is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Global X Hydrogen

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Hydrogen are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Global X unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPDR SPASX and Global X

The main advantage of trading using opposite SPDR SPASX and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SPASX 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 SPDR SPASX 200 and Global X Hydrogen 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.