Correlation Between Global X and IA Clarington

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

Diversification Opportunities for Global X and IA Clarington

-0.05

Correlation Coefficient

Global X  IA Clarington

Good diversification

The 3 months correlation between Global and ICPB is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Global X Active and IA Clarington Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IA Clarington Core 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 IA Clarington. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IA Clarington Core has no effect on the direction of Global X i.e., Global X and IA Clarington go up and down completely randomly.

Pair Corralation between Global X and IA Clarington

Assuming the 90 days trading horizon Global X Active is expected to under-perform the IA Clarington. But the etf apears to be less risky and, when comparing its historical volatility, Global X Active is 1.25 times less risky than IA Clarington. The etf trades about -0.01 of its potential returns per unit of risk. The IA Clarington Core is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  937.00  in IA Clarington Core on September 14, 2024 and sell it today you would earn a total of  17.00  from holding IA Clarington Core or generate 1.81% return on investment over 90 days.

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

Global X Active  vs.  IA Clarington Core

Global X Active

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X Active has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

IA Clarington Core

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IA Clarington Core are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IA Clarington is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Global X and IA Clarington

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

The idea behind Global X Active and IA Clarington Core 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.