Correlation Between Global X and Under Armour
Can any of the company-specific risk be diversified away by investing in both Global X and Under Armour 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 Under Armour into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Funds and Under Armour, you can compare the effects of market volatilities on Global X and Under Armour 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 Under Armour. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Under Armour.
Diversification Opportunities for Global X and Under Armour
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and Under is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds and Under Armour in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Under Armour 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 Funds are associated (or correlated) with Under Armour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Under Armour has no effect on the direction of Global X i.e., Global X and Under Armour go up and down completely randomly.
Pair Corralation between Global X and Under Armour
Assuming the 90 days trading horizon Global X is expected to generate 1.33 times less return on investment than Under Armour. But when comparing it to its historical volatility, Global X Funds is 3.01 times less risky than Under Armour. It trades about 0.12 of its potential returns per unit of risk. Under Armour is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,900 in Under Armour on September 12, 2024 and sell it today you would earn a total of 1,554 from holding Under Armour or generate 39.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.8% |
| Values | Daily Returns |
Global X Funds vs. Under Armour
Performance |
| Timeline |
| Global X Funds |
| Under Armour |
Global X and Under Armour Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Under Armour
The main advantage of trading using opposite Global X and Under Armour positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Under Armour 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 Under Armour will offset losses from the drop in Under Armour's long position.| Global X vs. Taiwan Semiconductor Manufacturing | Global X vs. Apple Inc | Global X vs. Alibaba Group Holding | Global X vs. Microsoft |
| Under Armour vs. Tyson Foods | Under Armour vs. NXP Semiconductors NV | Under Armour vs. Metalurgica Gerdau SA | Under Armour vs. Global X Funds |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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