Correlation Between Global X and Financial
Can any of the company-specific risk be diversified away by investing in both Global X and Financial 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 Financial 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 Financial 15 Split, you can compare the effects of market volatilities on Global X and Financial 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 Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Financial.
Diversification Opportunities for Global X and Financial
Very good diversification
The 3 months correlation between Global and Financial is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Global X Active and Financial 15 Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial 15 Split 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 Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial 15 Split has no effect on the direction of Global X i.e., Global X and Financial go up and down completely randomly.
Pair Corralation between Global X and Financial
Assuming the 90 days trading horizon Global X Active is expected to under-perform the Financial. But the etf apears to be less risky and, when comparing its historical volatility, Global X Active is 1.16 times less risky than Financial. The etf trades about -0.16 of its potential returns per unit of risk. The Financial 15 Split is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 1,090 in Financial 15 Split on November 29, 2024 and sell it today you would earn a total of 32.00 from holding Financial 15 Split or generate 2.94% 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 Active vs. Financial 15 Split
Performance |
| Timeline |
| Global X Active |
| Financial 15 Split |
Global X and Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Financial
The main advantage of trading using opposite Global X and Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Financial 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 Financial will offset losses from the drop in Financial'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 |
| Financial vs. North American Financial | Financial vs. Dividend 15 Split | Financial vs. Dividend Growth Split | Financial vs. Dividend 15 Split |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |