Correlation Between Global X and Desjardins
Can any of the company-specific risk be diversified away by investing in both Global X and Desjardins 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 Desjardins into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Canadian and Desjardins RI Active, you can compare the effects of market volatilities on Global X and Desjardins 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 Desjardins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Desjardins.
Diversification Opportunities for Global X and Desjardins
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and Desjardins is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Global X Canadian and Desjardins RI Active in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desjardins RI Active 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 Canadian are associated (or correlated) with Desjardins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desjardins RI Active has no effect on the direction of Global X i.e., Global X and Desjardins go up and down completely randomly.
Pair Corralation between Global X and Desjardins
Assuming the 90 days trading horizon Global X is expected to generate 1.21 times less return on investment than Desjardins. But when comparing it to its historical volatility, Global X Canadian is 1.0 times less risky than Desjardins. It trades about 0.03 of its potential returns per unit of risk. Desjardins RI Active is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,750 in Desjardins RI Active on August 30, 2024 and sell it today you would earn a total of 136.00 from holding Desjardins RI Active or generate 7.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Canadian vs. Desjardins RI Active
Performance |
| Timeline |
| Global X Canadian |
| Desjardins RI Active |
Global X and Desjardins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Desjardins
The main advantage of trading using opposite Global X and Desjardins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Desjardins 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 Desjardins will offset losses from the drop in Desjardins' long position.| Global X vs. Global X Intl | Global X vs. Global X SP | Global X vs. BMO Discount Bond | Global X vs. Global X 7 10 |
| Desjardins vs. BMO Aggregate Bond | Desjardins vs. iShares Canadian Universe | Desjardins vs. BMO Core Plus | Desjardins vs. BMO Discount Bond |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |