Correlation Between Virtus Real and Global X

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

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

Diversification Opportunities for Virtus Real and Global X

0.23

Correlation Coefficient

Virtus Real  Global X

Modest diversification

The 3 months correlation between Virtus and Global is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Real Asset and Global X Thematic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Thematic and Virtus Real 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 Virtus Real Asset 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 Thematic has no effect on the direction of Virtus Real i.e., Virtus Real and Global X go up and down completely randomly.

Pair Corralation between Virtus Real and Global X

Given the investment horizon of 90 days Virtus Real Asset is expected to under-perform the Global X. But the etf apears to be less risky and, when comparing its historical volatility, Virtus Real Asset is 2.12 times less risky than Global X. The etf trades about -0.02 of its potential returns per unit of risk. The Global X Thematic is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,343  in Global X Thematic on September 15, 2024 and sell it today you would earn a total of  141.00  from holding Global X Thematic or generate 6.02% return on investment over 90 days.

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

Virtus Real Asset  vs.  Global X Thematic

Virtus Real Asset

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus Real Asset has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Virtus Real is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Global X Thematic

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Thematic are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Global X is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Virtus Real and Global X

The main advantage of trading using opposite Virtus Real and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Real 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 Virtus Real Asset and Global X Thematic 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.