Correlation Between Growth Fund and Global X
Can any of the company-specific risk be diversified away by investing in both Growth Fund 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 Growth Fund and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Fund Of and Global X E commerce, you can compare the effects of market volatilities on Growth Fund 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 Growth Fund with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Global X.
Diversification Opportunities for Growth Fund and Global X
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Growth and Global is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Global X E commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X E and Growth Fund 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 Growth Fund Of 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 E has no effect on the direction of Growth Fund i.e., Growth Fund and Global X go up and down completely randomly.
Pair Corralation between Growth Fund and Global X
Assuming the 90 days horizon Growth Fund is expected to generate 3.04 times less return on investment than Global X. But when comparing it to its historical volatility, Growth Fund Of is 1.36 times less risky than Global X. It trades about 0.17 of its potential returns per unit of risk. Global X E commerce is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 2,774 in Global X E commerce on November 4, 2024 and sell it today you would earn a total of 300.00 from holding Global X E commerce or generate 10.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund Of vs. Global X E commerce
Performance |
| Timeline |
| Growth Fund |
| Global X E |
Growth Fund and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Global X
The main advantage of trading using opposite Growth Fund and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund 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.| Growth Fund vs. Capital World Growth | Growth Fund vs. Europacific Growth Fund | Growth Fund vs. New Perspective Fund | Growth Fund vs. Investment Of America |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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