Correlation Between Global X and Global Healthcare
Can any of the company-specific risk be diversified away by investing in both Global X and Global Healthcare 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 Global Healthcare 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 Global Healthcare Income, you can compare the effects of market volatilities on Global X and Global Healthcare 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 Global Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Global Healthcare.
Diversification Opportunities for Global X and Global Healthcare
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Global and Global is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Global X Active and Global Healthcare Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Healthcare Income 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 Global Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Healthcare Income has no effect on the direction of Global X i.e., Global X and Global Healthcare go up and down completely randomly.
Pair Corralation between Global X and Global Healthcare
Assuming the 90 days trading horizon Global X Active is expected to generate 0.68 times more return on investment than Global Healthcare. However, Global X Active is 1.46 times less risky than Global Healthcare. It trades about 0.11 of its potential returns per unit of risk. Global Healthcare Income is currently generating about -0.05 per unit of risk. If you would invest 3,770 in Global X Active on August 29, 2024 and sell it today you would earn a total of 56.00 from holding Global X Active or generate 1.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Global X Active vs. Global Healthcare Income
Performance |
| Timeline |
| Global X Active |
| Global Healthcare Income |
Global X and Global Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Global Healthcare
The main advantage of trading using opposite Global X and Global Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Global Healthcare 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 Healthcare will offset losses from the drop in Global Healthcare's long position.| Global X vs. Global X Active | Global X vs. Global X Active | Global X vs. Global X Seasonal | Global X vs. Global X Active |
| Global Healthcare vs. Blue Ribbon Income | Global Healthcare vs. MINT Income Fund | Global Healthcare vs. Energy Income | Global Healthcare vs. Canadian High Income |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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