Correlation Between Global X and Avantis Emerging
Can any of the company-specific risk be diversified away by investing in both Global X and Avantis Emerging 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 Avantis Emerging 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 Avantis Emerging Markets, you can compare the effects of market volatilities on Global X and Avantis Emerging 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 Avantis Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Avantis Emerging.
Diversification Opportunities for Global X and Avantis Emerging
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Global and Avantis is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds and Avantis Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis Emerging Markets 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 Avantis Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis Emerging Markets has no effect on the direction of Global X i.e., Global X and Avantis Emerging go up and down completely randomly.
Pair Corralation between Global X and Avantis Emerging
Considering the 90-day investment horizon Global X Funds is expected to generate 0.78 times more return on investment than Avantis Emerging. However, Global X Funds is 1.28 times less risky than Avantis Emerging. It trades about -0.21 of its potential returns per unit of risk. Avantis Emerging Markets is currently generating about -0.17 per unit of risk. If you would invest 2,759 in Global X Funds on August 28, 2024 and sell it today you would lose (99.00) from holding Global X Funds or give up 3.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Funds vs. Avantis Emerging Markets
Performance |
| Timeline |
| Global X Funds |
| Avantis Emerging Markets |
Global X and Avantis Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Avantis Emerging
The main advantage of trading using opposite Global X and Avantis Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Avantis Emerging 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 Avantis Emerging will offset losses from the drop in Avantis Emerging's long position.| Global X vs. Invesco PureBeta MSCI | Global X vs. Aquagold International | Global X vs. Morningstar Unconstrained Allocation | Global X vs. High Yield Municipal Fund |
| Avantis Emerging vs. Invesco PureBeta MSCI | Avantis Emerging vs. Aquagold International | Avantis Emerging vs. Morningstar Unconstrained Allocation | Avantis Emerging vs. High Yield Municipal Fund |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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