Correlation Between SPDR EURO and Global X
Can any of the company-specific risk be diversified away by investing in both SPDR EURO 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 SPDR EURO and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR EURO STOXX and Global X DAX, you can compare the effects of market volatilities on SPDR EURO 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 SPDR EURO with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR EURO and Global X.
Diversification Opportunities for SPDR EURO and Global X
Very poor diversification
The 3 months correlation between SPDR and Global is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding SPDR EURO STOXX and Global X DAX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X DAX and SPDR EURO 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 SPDR EURO STOXX 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 DAX has no effect on the direction of SPDR EURO i.e., SPDR EURO and Global X go up and down completely randomly.
Pair Corralation between SPDR EURO and Global X
Considering the 90-day investment horizon SPDR EURO STOXX is expected to under-perform the Global X. In addition to that, SPDR EURO is 1.09 times more volatile than Global X DAX. It trades about -0.13 of its total potential returns per unit of risk. Global X DAX is currently generating about -0.03 per unit of volatility. If you would invest 3,393 in Global X DAX on August 30, 2024 and sell it today you would lose (83.00) from holding Global X DAX or give up 2.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR EURO STOXX vs. Global X DAX
Performance |
| Timeline |
| SPDR EURO STOXX |
| Global X DAX |
SPDR EURO and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR EURO and Global X
The main advantage of trading using opposite SPDR EURO and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR EURO 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.| SPDR EURO vs. iShares MSCI Eurozone | SPDR EURO vs. iShares MSCI Germany | SPDR EURO vs. iShares MSCI United | SPDR EURO vs. iShares Europe ETF |
| Global X vs. Camden National | Global X vs. iShares MSCI Germany | Global X vs. SPDR EURO STOXX | Global X vs. iShares MSCI France |
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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