Correlation Between Global X and Purpose Tactical
Can any of the company-specific risk be diversified away by investing in both Global X and Purpose Tactical 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 Purpose Tactical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Active and Purpose Tactical Hedged, you can compare the effects of market volatilities on Global X and Purpose Tactical 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 Purpose Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Purpose Tactical.
Diversification Opportunities for Global X and Purpose Tactical
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and Purpose is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Global X Active and Purpose Tactical Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Purpose Tactical Hedged 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 Active are associated (or correlated) with Purpose Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Purpose Tactical Hedged has no effect on the direction of Global X i.e., Global X and Purpose Tactical go up and down completely randomly.
Pair Corralation between Global X and Purpose Tactical
Assuming the 90 days trading horizon Global X is expected to generate 1.38 times less return on investment than Purpose Tactical. But when comparing it to its historical volatility, Global X Active is 1.36 times less risky than Purpose Tactical. It trades about 0.11 of its potential returns per unit of risk. Purpose Tactical Hedged is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,415 in Purpose Tactical Hedged on September 3, 2024 and sell it today you would earn a total of 267.00 from holding Purpose Tactical Hedged or generate 7.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Active vs. Purpose Tactical Hedged
Performance |
| Timeline |
| Global X Active |
| Purpose Tactical Hedged |
Global X and Purpose Tactical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Purpose Tactical
The main advantage of trading using opposite Global X and Purpose Tactical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Purpose Tactical 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 Purpose Tactical will offset losses from the drop in Purpose Tactical's long position.| Global X vs. iShares Canadian Government | Global X vs. iShares Canadian Short | Global X vs. iShares Core Canadian | Global X vs. iShares Canadian Real |
| Purpose Tactical vs. Global X Active | Purpose Tactical vs. Global X Active | Purpose Tactical vs. Global X Active | Purpose Tactical vs. Global X Active |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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