Correlation Between Global X and Global X

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

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

Diversification Opportunities for Global X and Global X

-0.63

Correlation Coefficient

Global X  Global X

Excellent diversification

The 3 months correlation between Global and Global is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Global X Treasury and Global X Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Semiconductor 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 Treasury 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 Semiconductor has no effect on the direction of Global X i.e., Global X and Global X go up and down completely randomly.

Pair Corralation between Global X and Global X

Assuming the 90 days trading horizon Global X Treasury is expected to under-perform the Global X. But the etf apears to be less risky and, when comparing its historical volatility, Global X Treasury is 4.66 times less risky than Global X. The etf trades about -0.11 of its potential returns per unit of risk. The Global X Semiconductor is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,576  in Global X Semiconductor on September 12, 2024 and sell it today you would earn a total of  98.00  from holding Global X Semiconductor or generate 6.22% return on investment over 90 days.

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

Global X Treasury  vs.  Global X Semiconductor

Global X Treasury

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X Treasury has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Global X is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Global X Semiconductor

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Semiconductor are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Global X and Global X

The main advantage of trading using opposite Global X and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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 Global X Treasury and Global X Semiconductor 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.