Correlation Between BFIT and Global X
Can any of the company-specific risk be diversified away by investing in both BFIT 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 BFIT and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BFIT and Global X SP, you can compare the effects of market volatilities on BFIT 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 BFIT with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of BFIT and Global X.
Diversification Opportunities for BFIT and Global X
Good diversification
The 3 months correlation between BFIT and Global is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding BFIT and Global X SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X SP and BFIT 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 BFIT 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 SP has no effect on the direction of BFIT i.e., BFIT and Global X go up and down completely randomly.
Pair Corralation between BFIT and Global X
Given the investment horizon of 90 days BFIT is expected to generate 1.65 times less return on investment than Global X. In addition to that, BFIT is 1.38 times more volatile than Global X SP. It trades about 0.05 of its total potential returns per unit of risk. Global X SP is currently generating about 0.11 per unit of volatility. If you would invest 4,760 in Global X SP on August 26, 2024 and sell it today you would earn a total of 2,506 from holding Global X SP or generate 52.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 31.99% |
| Values | Daily Returns |
BFIT vs. Global X SP
Performance |
| Timeline |
| BFIT |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Global X SP |
BFIT and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BFIT and Global X
The main advantage of trading using opposite BFIT and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BFIT 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 BFIT and Global X SP 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.| Global X vs. Global X Conscious | Global X vs. Global X MSCI | Global X vs. Global X Alternative | Global X vs. VictoryShares 500 Enhanced |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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