Correlation Between ETRACS Monthly and Global X
Can any of the company-specific risk be diversified away by investing in both ETRACS Monthly 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 ETRACS Monthly and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETRACS Monthly Pay and Global X Funds, you can compare the effects of market volatilities on ETRACS Monthly 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 ETRACS Monthly with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS Monthly and Global X.
Diversification Opportunities for ETRACS Monthly and Global X
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ETRACS and Global is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS Monthly Pay and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds and ETRACS Monthly 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 ETRACS Monthly Pay 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 Funds has no effect on the direction of ETRACS Monthly i.e., ETRACS Monthly and Global X go up and down completely randomly.
Pair Corralation between ETRACS Monthly and Global X
Given the investment horizon of 90 days ETRACS Monthly Pay is expected to generate 1.15 times more return on investment than Global X. However, ETRACS Monthly is 1.15 times more volatile than Global X Funds. It trades about 0.21 of its potential returns per unit of risk. Global X Funds is currently generating about 0.09 per unit of risk. If you would invest 1,971 in ETRACS Monthly Pay on September 3, 2024 and sell it today you would earn a total of 89.00 from holding ETRACS Monthly Pay or generate 4.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETRACS Monthly Pay vs. Global X Funds
Performance |
| Timeline |
| ETRACS Monthly Pay |
| Global X Funds |
ETRACS Monthly and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETRACS Monthly and Global X
The main advantage of trading using opposite ETRACS Monthly and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRACS Monthly 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.| ETRACS Monthly vs. ETRACS Quarterly Pay | ETRACS Monthly vs. Simplify Volatility Premium | ETRACS Monthly vs. ETRACS Monthly Pay | ETRACS Monthly vs. iShares Trust |
| Global X vs. Freedom Day Dividend | Global X vs. iShares MSCI China | Global X vs. SmartETFs Dividend Builder | Global X vs. Tidal ETF Trust |
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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