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 Thematic and SPDR SP Pharmaceuticals, 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
Very weak diversification
The 3 months correlation between Global and SPDR is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Global X Thematic and SPDR SP Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Pharmaceuticals 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 Thematic 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 Pharmaceuticals 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
Given the investment horizon of 90 days Global X Thematic is expected to generate 1.01 times more return on investment than SPDR SP. However, Global X is 1.01 times more volatile than SPDR SP Pharmaceuticals. It trades about -0.02 of its potential returns per unit of risk. SPDR SP Pharmaceuticals is currently generating about -0.05 per unit of risk. If you would invest 2,509 in Global X Thematic on August 29, 2024 and sell it today you would lose (18.00) from holding Global X Thematic or give up 0.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Thematic vs. SPDR SP Pharmaceuticals
Performance |
| Timeline |
| Global X Thematic |
| SPDR SP Pharmaceuticals |
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. Main Sector Rotation | Global X vs. Franklin Exponential Data | Global X vs. Goldman Sachs Innovate |
| SPDR SP vs. Global X Clean | SPDR SP vs. Global X Renewable | SPDR SP vs. Global X Thematic | SPDR SP vs. Global X AgTech |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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