Correlation Between Freedom 100 and Global X
Can any of the company-specific risk be diversified away by investing in both Freedom 100 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 Freedom 100 and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freedom 100 Emerging and Global X Thematic, you can compare the effects of market volatilities on Freedom 100 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 Freedom 100 with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom 100 and Global X.
Diversification Opportunities for Freedom 100 and Global X
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Freedom and Global is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Freedom 100 Emerging and Global X Thematic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Thematic and Freedom 100 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 Freedom 100 Emerging 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 Thematic has no effect on the direction of Freedom 100 i.e., Freedom 100 and Global X go up and down completely randomly.
Pair Corralation between Freedom 100 and Global X
Given the investment horizon of 90 days Freedom 100 Emerging is expected to under-perform the Global X. But the etf apears to be less risky and, when comparing its historical volatility, Freedom 100 Emerging is 1.11 times less risky than Global X. The etf trades about 0.0 of its potential returns per unit of risk. The Global X Thematic is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,372 in Global X Thematic on September 2, 2024 and sell it today you would earn a total of 179.00 from holding Global X Thematic or generate 7.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freedom 100 Emerging vs. Global X Thematic
Performance |
| Timeline |
| Freedom 100 Emerging |
| Global X Thematic |
Freedom 100 and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freedom 100 and Global X
The main advantage of trading using opposite Freedom 100 and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom 100 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.| Freedom 100 vs. Horizon Kinetics Inflation | Freedom 100 vs. iShares MSCI Emerging | Freedom 100 vs. iShares Emerging Markets | Freedom 100 vs. WisdomTree International High |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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