Correlation Between Ecofibre and Global X
Can any of the company-specific risk be diversified away by investing in both Ecofibre 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 Ecofibre and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecofibre and Global X Bloomberg, you can compare the effects of market volatilities on Ecofibre 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 Ecofibre with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecofibre and Global X.
Diversification Opportunities for Ecofibre and Global X
Very poor diversification
The 3 months correlation between Ecofibre and Global is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Ecofibre and Global X Bloomberg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Bloomberg and Ecofibre 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 Ecofibre 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 Bloomberg has no effect on the direction of Ecofibre i.e., Ecofibre and Global X go up and down completely randomly.
Pair Corralation between Ecofibre and Global X
Assuming the 90 days trading horizon Ecofibre is expected to under-perform the Global X. In addition to that, Ecofibre is 8.5 times more volatile than Global X Bloomberg. It trades about -0.02 of its total potential returns per unit of risk. Global X Bloomberg is currently generating about 0.04 per unit of volatility. If you would invest 940.00 in Global X Bloomberg on August 30, 2024 and sell it today you would earn a total of 108.00 from holding Global X Bloomberg or generate 11.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 72.29% |
| Values | Daily Returns |
Ecofibre vs. Global X Bloomberg
Performance |
| Timeline |
| Ecofibre |
| Global X Bloomberg |
Ecofibre and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecofibre and Global X
The main advantage of trading using opposite Ecofibre and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecofibre 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.| Ecofibre vs. Austco Healthcare | Ecofibre vs. Hotel Property Investments | Ecofibre vs. Apiam Animal Health | Ecofibre vs. Carlton Investments |
| Global X vs. BetaShares Geared Australian | Global X vs. BetaShares Global Robotics | Global X vs. iShares China LargeCap | Global X vs. Russell Australian Government |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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