Correlation Between Madison ETFs and Global X
Can any of the company-specific risk be diversified away by investing in both Madison ETFs 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 Madison ETFs and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Madison ETFs Trust and Global X SP, you can compare the effects of market volatilities on Madison ETFs 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 Madison ETFs with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison ETFs and Global X.
Diversification Opportunities for Madison ETFs and Global X
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Madison and Global is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Madison ETFs Trust and Global X SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X SP and Madison ETFs 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 Madison ETFs Trust 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 SP has no effect on the direction of Madison ETFs i.e., Madison ETFs and Global X go up and down completely randomly.
Pair Corralation between Madison ETFs and Global X
Given the investment horizon of 90 days Madison ETFs is expected to generate 1.56 times less return on investment than Global X. But when comparing it to its historical volatility, Madison ETFs Trust is 1.14 times less risky than Global X. It trades about 0.1 of its potential returns per unit of risk. Global X SP is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3,837 in Global X SP on September 5, 2024 and sell it today you would earn a total of 385.00 from holding Global X SP or generate 10.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.2% |
| Values | Daily Returns |
Madison ETFs Trust vs. Global X SP
Performance |
| Timeline |
| Madison ETFs Trust |
| Global X SP |
Madison ETFs and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Madison ETFs and Global X
The main advantage of trading using opposite Madison ETFs and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madison ETFs 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.| Madison ETFs vs. Global X SP | Madison ETFs vs. Global X NASDAQ | Madison ETFs vs. NEOS ETF Trust | Madison ETFs vs. JPMorgan Equity Premium |
| Global X vs. Global X Russell | Global X vs. Global X NASDAQ | Global X vs. NEOS ETF Trust | Global X vs. JPMorgan Equity Premium |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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