Correlation Between CI Global and Global X
Can any of the company-specific risk be diversified away by investing in both CI Global 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 CI Global and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CI Global Climate and Global X Seasonal, you can compare the effects of market volatilities on CI Global 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 CI Global with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Global and Global X.
Diversification Opportunities for CI Global and Global X
Poor diversification
The 3 months correlation between CLML and Global is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding CI Global Climate and Global X Seasonal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Seasonal and CI Global 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 CI Global Climate 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 Seasonal has no effect on the direction of CI Global i.e., CI Global and Global X go up and down completely randomly.
Pair Corralation between CI Global and Global X
Assuming the 90 days trading horizon CI Global Climate is expected to generate 2.15 times more return on investment than Global X. However, CI Global is 2.15 times more volatile than Global X Seasonal. It trades about 0.14 of its potential returns per unit of risk. Global X Seasonal is currently generating about 0.11 per unit of risk. If you would invest 1,758 in CI Global Climate on August 28, 2024 and sell it today you would earn a total of 1,668 from holding CI Global Climate or generate 94.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.85% |
| Values | Daily Returns |
CI Global Climate vs. Global X Seasonal
Performance |
| Timeline |
| CI Global Climate |
| Global X Seasonal |
CI Global and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CI Global and Global X
The main advantage of trading using opposite CI Global and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI Global 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.| CI Global vs. Vanguard FTSE Canada | CI Global vs. Vanguard Canadian Aggregate | CI Global vs. Vanguard Total Market | CI Global vs. Vanguard FTSE Emerging |
| Global X vs. Global X Active | Global X vs. Global X Active | Global X vs. Global X Active | Global X vs. Global X Active |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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