Correlation Between Global X and Roundhill Investments
Can any of the company-specific risk be diversified away by investing in both Global X and Roundhill Investments 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 Roundhill Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Blockchain and Roundhill Investments, you can compare the effects of market volatilities on Global X and Roundhill Investments 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 Roundhill Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Roundhill Investments.
Diversification Opportunities for Global X and Roundhill Investments
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Global and Roundhill is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Global X Blockchain and Roundhill Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roundhill Investments 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 Blockchain are associated (or correlated) with Roundhill Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roundhill Investments has no effect on the direction of Global X i.e., Global X and Roundhill Investments go up and down completely randomly.
Pair Corralation between Global X and Roundhill Investments
Given the investment horizon of 90 days Global X Blockchain is expected to generate 1.93 times more return on investment than Roundhill Investments. However, Global X is 1.93 times more volatile than Roundhill Investments. It trades about 0.09 of its potential returns per unit of risk. Roundhill Investments is currently generating about 0.09 per unit of risk. If you would invest 1,483 in Global X Blockchain on August 27, 2024 and sell it today you would earn a total of 5,431 from holding Global X Blockchain or generate 366.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 31.85% |
| Values | Daily Returns |
Global X Blockchain vs. Roundhill Investments
Performance |
| Timeline |
| Global X Blockchain |
| Roundhill Investments |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Global X and Roundhill Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Roundhill Investments
The main advantage of trading using opposite Global X and Roundhill Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Roundhill Investments 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 Roundhill Investments will offset losses from the drop in Roundhill Investments' long position.| Global X vs. UBS AG London | Global X vs. UBS AG London | Global X vs. ETRACS Quarterly Pay | Global X vs. ETRACS 2xMonthly Pay |
| Roundhill Investments vs. SoFi Social 50 | Roundhill Investments vs. Global X Blockchain | Roundhill Investments vs. Tuttle Capital Short |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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