Correlation Between Global X and Aston Bay
Can any of the company-specific risk be diversified away by investing in both Global X and Aston Bay 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 Aston Bay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Active and Aston Bay Holdings, you can compare the effects of market volatilities on Global X and Aston Bay 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 Aston Bay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Aston Bay.
Diversification Opportunities for Global X and Aston Bay
Average diversification
The 3 months correlation between Global and Aston is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Global X Active and Aston Bay Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aston Bay Holdings 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 Active are associated (or correlated) with Aston Bay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aston Bay Holdings has no effect on the direction of Global X i.e., Global X and Aston Bay go up and down completely randomly.
Pair Corralation between Global X and Aston Bay
Assuming the 90 days trading horizon Global X is expected to generate 20.37 times less return on investment than Aston Bay. But when comparing it to its historical volatility, Global X Active is 19.75 times less risky than Aston Bay. It trades about 0.07 of its potential returns per unit of risk. Aston Bay Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2.00 in Aston Bay Holdings on September 3, 2024 and sell it today you would earn a total of 5.00 from holding Aston Bay Holdings or generate 250.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Global X Active vs. Aston Bay Holdings
Performance |
| Timeline |
| Global X Active |
| Aston Bay Holdings |
Global X and Aston Bay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Aston Bay
The main advantage of trading using opposite Global X and Aston Bay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Aston Bay 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 Aston Bay will offset losses from the drop in Aston Bay'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 |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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