Correlation Between Global X and Tarku Resources

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

Diversification Opportunities for Global X and Tarku Resources

0.07

Correlation Coefficient

Global X  Tarku Resources

Significant diversification

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

Pair Corralation between Global X and Tarku Resources

Assuming the 90 days trading horizon Global X Active is expected to generate 0.03 times more return on investment than Tarku Resources. However, Global X Active is 29.18 times less risky than Tarku Resources. It trades about 0.07 of its potential returns per unit of risk. Tarku Resources is currently generating about -0.01 per unit of risk. If you would invest  922.00  in Global X Active on August 31, 2024 and sell it today you would earn a total of  18.00  from holding Global X Active or generate 1.95% return on investment over 90 days.

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

Global X Active  vs.  Tarku Resources

Global X Active

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Active are ranked lower than 5 (%) 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.

Tarku Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tarku Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Global X and Tarku Resources

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

The idea behind Global X Active and Tarku Resources 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 Transaction History module to view history of all your transactions and understand their impact on performance.