Correlation Between XBTF and Global X

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

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

Diversification Opportunities for XBTF and Global X

0.42

Correlation Coefficient

XBTF  Global X

Very weak diversification

The 3 months correlation between XBTF and Global is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding XBTF and Global X Blockchain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Blockchain and XBTF 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 XBTF 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 Blockchain has no effect on the direction of XBTF i.e., XBTF and Global X go up and down completely randomly.

Pair Corralation between XBTF and Global X

Given the investment horizon of 90 days XBTF is expected to generate 0.76 times more return on investment than Global X. However, XBTF is 1.32 times less risky than Global X. It trades about 0.12 of its potential returns per unit of risk. Global X Blockchain is currently generating about 0.09 per unit of risk. If you would invest  1,703  in XBTF on September 25, 2024 and sell it today you would earn a total of  1,150  from holding XBTF or generate 67.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	27.97%
Values	Daily Returns

XBTF  vs.  Global X Blockchain

XBTF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XBTF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, XBTF is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Global X Blockchain

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Blockchain are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Global X demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with XBTF and Global X

The main advantage of trading using opposite XBTF and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XBTF 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 XBTF and Global X Blockchain 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.