Correlation Between Evolve E and Global X
Can any of the company-specific risk be diversified away by investing in both Evolve E 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 Evolve E and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evolve E Gaming Index and Global X Robotics, you can compare the effects of market volatilities on Evolve E 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 Evolve E with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolve E and Global X.
Diversification Opportunities for Evolve E and Global X
Very poor diversification
The 3 months correlation between Evolve and Global is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Evolve E Gaming Index and Global X Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Robotics and Evolve E 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 Evolve E Gaming Index 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 Robotics has no effect on the direction of Evolve E i.e., Evolve E and Global X go up and down completely randomly.
Pair Corralation between Evolve E and Global X
Assuming the 90 days trading horizon Evolve E Gaming Index is expected to generate 0.76 times more return on investment than Global X. However, Evolve E Gaming Index is 1.31 times less risky than Global X. It trades about 0.11 of its potential returns per unit of risk. Global X Robotics is currently generating about 0.05 per unit of risk. If you would invest 3,004 in Evolve E Gaming Index on August 29, 2024 and sell it today you would earn a total of 424.00 from holding Evolve E Gaming Index or generate 14.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evolve E Gaming Index vs. Global X Robotics
Performance |
| Timeline |
| Evolve E Gaming |
| Global X Robotics |
Evolve E and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evolve E and Global X
The main advantage of trading using opposite Evolve E and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolve E 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.| Evolve E vs. Evolve Cyber Security | Evolve E vs. Evolve Automobile Innovation | Evolve E vs. Evolve Innovation Index | Evolve E vs. Harvest Clean Energy |
| Global X vs. BMO Covered Call | Global X vs. BMO Canadian High | Global X vs. BMO Europe High | Global X vs. Harvest Healthcare Leaders |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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