Correlation Between Desjardins Alt and Global X
Can any of the company-specific risk be diversified away by investing in both Desjardins Alt 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 Desjardins Alt and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Desjardins Alt LongShort and Global X Active, you can compare the effects of market volatilities on Desjardins Alt 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 Desjardins Alt with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Desjardins Alt and Global X.
Diversification Opportunities for Desjardins Alt and Global X
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Desjardins and Global is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Desjardins Alt LongShort and Global X Active in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Active and Desjardins Alt 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 Desjardins Alt LongShort 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 Active has no effect on the direction of Desjardins Alt i.e., Desjardins Alt and Global X go up and down completely randomly.
Pair Corralation between Desjardins Alt and Global X
Assuming the 90 days trading horizon Desjardins Alt is expected to generate 3.41 times less return on investment than Global X. But when comparing it to its historical volatility, Desjardins Alt LongShort is 4.71 times less risky than Global X. It trades about 0.13 of its potential returns per unit of risk. Global X Active is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,023 in Global X Active on September 12, 2024 and sell it today you would earn a total of 10.00 from holding Global X Active or generate 0.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Desjardins Alt LongShort vs. Global X Active
Performance |
| Timeline |
| Desjardins Alt LongShort |
| Global X Active |
Desjardins Alt and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Desjardins Alt and Global X
The main advantage of trading using opposite Desjardins Alt and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Desjardins Alt 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.| Desjardins Alt vs. Desjardins American Equity | Desjardins Alt vs. Desjardins RI Canada | Desjardins Alt vs. Desjardins RI Canada | Desjardins Alt vs. Desjardins Canadian Corporate |
| Global X vs. iShares Core Canadian | Global X vs. BMO Mid Corporate | Global X vs. iShares 1 10Yr Laddered | Global X vs. RBC Target 2026 |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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