Correlation Between Swan Hedged and Global X
Can any of the company-specific risk be diversified away by investing in both Swan Hedged and Global X 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 Swan Hedged and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swan Hedged Equity and Global X SP, you can compare the effects of market volatilities on Swan Hedged and Global X 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 Swan Hedged with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swan Hedged and Global X.
Diversification Opportunities for Swan Hedged and Global X
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Swan and Global is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Swan Hedged Equity and Global X SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X SP and Swan Hedged 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 Swan Hedged Equity are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X SP has no effect on the direction of Swan Hedged i.e., Swan Hedged and Global X go up and down completely randomly.
Pair Corralation between Swan Hedged and Global X
Given the investment horizon of 90 days Swan Hedged is expected to generate 1.4 times less return on investment than Global X. But when comparing it to its historical volatility, Swan Hedged Equity is 1.35 times less risky than Global X. It trades about 0.1 of its potential returns per unit of risk. Global X SP is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,294 in Global X SP on August 30, 2024 and sell it today you would earn a total of 1,064 from holding Global X SP or generate 46.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swan Hedged Equity vs. Global X SP
Performance |
| Timeline |
| Swan Hedged Equity |
| Global X SP |
Swan Hedged and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swan Hedged and Global X
The main advantage of trading using opposite Swan Hedged and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swan Hedged position performs unexpectedly, Global X 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 X will offset losses from the drop in Global X's long position.| Swan Hedged vs. Alpha Architect Quantitative | Swan Hedged vs. Alpha Architect International | Swan Hedged vs. Alpha Architect International | Swan Hedged vs. Alpha Architect Quantitative |
| Global X vs. Freedom Day Dividend | Global X vs. Franklin Templeton ETF | Global X vs. iShares MSCI China | Global X vs. Tidal Trust II |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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