Correlation Between Global X and Chemtrade Logistics

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

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

Diversification Opportunities for Global X and Chemtrade Logistics

0.07

Correlation Coefficient

Global X  Chemtrade Logistics

Significant diversification

The 3 months correlation between Global and Chemtrade is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Global X Active and Chemtrade Logistics Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemtrade Logistics 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 Active are associated (or correlated) with Chemtrade Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemtrade Logistics has no effect on the direction of Global X i.e., Global X and Chemtrade Logistics go up and down completely randomly.

Pair Corralation between Global X and Chemtrade Logistics

Assuming the 90 days trading horizon Global X is expected to generate 11.07 times less return on investment than Chemtrade Logistics. But when comparing it to its historical volatility, Global X Active is 2.34 times less risky than Chemtrade Logistics. It trades about 0.05 of its potential returns per unit of risk. Chemtrade Logistics Income is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  982.00  in Chemtrade Logistics Income on September 2, 2024 and sell it today you would earn a total of  200.00  from holding Chemtrade Logistics Income or generate 20.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Global X Active  vs.  Chemtrade Logistics Income

Global X Active

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Active are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Global X is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Chemtrade Logistics

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chemtrade Logistics Income are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Chemtrade Logistics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global X and Chemtrade Logistics

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

The idea behind Global X Active and Chemtrade Logistics Income 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.

Check out your portfolio center.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.