Correlation Between Global X and Communication Services
Can any of the company-specific risk be diversified away by investing in both Global X and Communication Services 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 Communication Services into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Video and Communication Services Select, you can compare the effects of market volatilities on Global X and Communication Services 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 Communication Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Communication Services.
Diversification Opportunities for Global X and Communication Services
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and Communication is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Global X Video and Communication Services Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Communication Services 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 Video are associated (or correlated) with Communication Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Communication Services has no effect on the direction of Global X i.e., Global X and Communication Services go up and down completely randomly.
Pair Corralation between Global X and Communication Services
Given the investment horizon of 90 days Global X is expected to generate 3.52 times less return on investment than Communication Services. In addition to that, Global X is 1.48 times more volatile than Communication Services Select. It trades about 0.07 of its total potential returns per unit of risk. Communication Services Select is currently generating about 0.35 per unit of volatility. If you would invest 9,143 in Communication Services Select on August 29, 2024 and sell it today you would earn a total of 644.00 from holding Communication Services Select or generate 7.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Video vs. Communication Services Select
Performance |
| Timeline |
| Global X Video |
| Communication Services |
Global X and Communication Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Communication Services
The main advantage of trading using opposite Global X and Communication Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Communication Services 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 Communication Services will offset losses from the drop in Communication Services' long position.| Global X vs. VanEck Video Gaming | Global X vs. Roundhill Video Games | Global X vs. Amplify ETF Trust | Global X vs. First Trust S Network |
| Communication Services vs. Roundhill Video Games | Communication Services vs. Global X Video | Communication Services vs. Amplify ETF Trust | Communication Services vs. Global X Cloud |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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