Correlation Between Global X and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Global X and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Robotics and Dow Jones Industrial, you can compare the effects of market volatilities on Global X and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Dow Jones.
Diversification Opportunities for Global X and Dow Jones
Poor diversification
The 3 months correlation between Global and Dow is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Global X Robotics and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Robotics are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Global X i.e., Global X and Dow Jones go up and down completely randomly.
Pair Corralation between Global X and Dow Jones
Given the investment horizon of 90 days Global X Robotics is expected to generate 1.88 times more return on investment than Dow Jones. However, Global X is 1.88 times more volatile than Dow Jones Industrial. It trades about 0.07 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 2,114 in Global X Robotics on August 29, 2024 and sell it today you would earn a total of 1,213 from holding Global X Robotics or generate 57.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Robotics vs. Dow Jones Industrial
Performance |
| Timeline |
Global X and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Global X Robotics
Pair trading matchups for Global X
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Global X and Dow Jones
The main advantage of trading using opposite Global X and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Global X vs. Robo Global Robotics | Global X vs. Global X Cloud | Global X vs. Global X Lithium | Global X vs. ARK Autonomous Technology |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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