Correlation Between Global X and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Global X and SPDR SP 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 SPDR SP 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 SPDR SP Emerging, you can compare the effects of market volatilities on Global X and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and SPDR SP.
Diversification Opportunities for Global X and SPDR SP
Poor diversification
The 3 months correlation between Global and SPDR is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds and SPDR SP Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Emerging 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Emerging has no effect on the direction of Global X i.e., Global X and SPDR SP go up and down completely randomly.
Pair Corralation between Global X and SPDR SP
Considering the 90-day investment horizon Global X Funds is expected to under-perform the SPDR SP. But the etf apears to be less risky and, when comparing its historical volatility, Global X Funds is 1.0 times less risky than SPDR SP. The etf trades about -0.17 of its potential returns per unit of risk. The SPDR SP Emerging is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 3,598 in SPDR SP Emerging on September 1, 2024 and sell it today you would lose (61.00) from holding SPDR SP Emerging or give up 1.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Funds vs. SPDR SP Emerging
Performance |
| Timeline |
| Global X Funds |
| SPDR SP Emerging |
Global X and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and SPDR SP
The main advantage of trading using opposite Global X and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP's long position.| Global X vs. Freedom Day Dividend | Global X vs. iShares MSCI China | Global X vs. iShares Dividend and | Global X vs. SmartETFs Dividend Builder |
| SPDR SP vs. SPDR SP International | SPDR SP vs. iShares Emerging Markets | SPDR SP vs. First Trust Dow | SPDR SP vs. SPDR SP Global |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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