Correlation Between Global X and Rackla Metals
Can any of the company-specific risk be diversified away by investing in both Global X and Rackla Metals 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 Rackla Metals 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 Rackla Metals, you can compare the effects of market volatilities on Global X and Rackla Metals 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 Rackla Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Rackla Metals.
Diversification Opportunities for Global X and Rackla Metals
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Global and Rackla is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Global X Active and Rackla Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rackla Metals 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 Rackla Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rackla Metals has no effect on the direction of Global X i.e., Global X and Rackla Metals go up and down completely randomly.
Pair Corralation between Global X and Rackla Metals
Assuming the 90 days trading horizon Global X is expected to generate 10.83 times less return on investment than Rackla Metals. But when comparing it to its historical volatility, Global X Active is 18.59 times less risky than Rackla Metals. It trades about 0.07 of its potential returns per unit of risk. Rackla Metals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 18.00 in Rackla Metals on September 2, 2024 and sell it today you would lose (4.00) from holding Rackla Metals or give up 22.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Global X Active vs. Rackla Metals
Performance |
| Timeline |
| Global X Active |
| Rackla Metals |
Global X and Rackla Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Rackla Metals
The main advantage of trading using opposite Global X and Rackla Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Rackla Metals 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 Rackla Metals will offset losses from the drop in Rackla Metals' long position.| Global X vs. BMO Covered Call | Global X vs. Forstrong Global Income | Global X vs. BMO Aggregate Bond | Global X vs. iShares Canadian HYBrid |
| Rackla Metals vs. First Majestic Silver | Rackla Metals vs. Ivanhoe Energy | Rackla Metals vs. Orezone Gold Corp |
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.
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