Correlation Between Global X and Purpose Premium
Can any of the company-specific risk be diversified away by investing in both Global X and Purpose Premium 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 Premium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Big and Purpose Premium Yield, you can compare the effects of market volatilities on Global X and Purpose Premium 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 Premium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Purpose Premium.
Diversification Opportunities for Global X and Purpose Premium
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Global and Purpose is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Global X Big and Purpose Premium Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Purpose Premium Yield 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 Big are associated (or correlated) with Purpose Premium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Purpose Premium Yield has no effect on the direction of Global X i.e., Global X and Purpose Premium go up and down completely randomly.
Pair Corralation between Global X and Purpose Premium
Assuming the 90 days trading horizon Global X Big is expected to generate 4.46 times more return on investment than Purpose Premium. However, Global X is 4.46 times more volatile than Purpose Premium Yield. It trades about 0.25 of its potential returns per unit of risk. Purpose Premium Yield is currently generating about 0.12 per unit of risk. If you would invest 2,199 in Global X Big on October 25, 2024 and sell it today you would earn a total of 135.00 from holding Global X Big or generate 6.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Big vs. Purpose Premium Yield
Performance |
| Timeline |
| Global X Big |
| Purpose Premium Yield |
Global X and Purpose Premium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Purpose Premium
The main advantage of trading using opposite Global X and Purpose Premium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Purpose Premium 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 Premium will offset losses from the drop in Purpose Premium's long position.| Global X vs. Global X Equal | Global X vs. Global X Enhanced | Global X vs. Global X Gold | Global X vs. Global X Canadian |
| Purpose Premium vs. Purpose Core Dividend | Purpose Premium vs. Purpose International Dividend | Purpose Premium vs. Purpose Monthly Income | Purpose Premium vs. BMO Put Write |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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