Correlation Between Global X and Rocky Mountain
Can any of the company-specific risk be diversified away by investing in both Global X and Rocky Mountain 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 Rocky Mountain 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 Rocky Mountain Liquor, you can compare the effects of market volatilities on Global X and Rocky Mountain 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 Rocky Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Rocky Mountain.
Diversification Opportunities for Global X and Rocky Mountain
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and Rocky is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Global X Active and Rocky Mountain Liquor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocky Mountain Liquor 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 Rocky Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocky Mountain Liquor has no effect on the direction of Global X i.e., Global X and Rocky Mountain go up and down completely randomly.
Pair Corralation between Global X and Rocky Mountain
Assuming the 90 days trading horizon Global X Active is expected to generate 0.17 times more return on investment than Rocky Mountain. However, Global X Active is 5.92 times less risky than Rocky Mountain. It trades about 0.14 of its potential returns per unit of risk. Rocky Mountain Liquor is currently generating about -0.12 per unit of risk. If you would invest 927.00 in Global X Active on August 31, 2024 and sell it today you would earn a total of 13.00 from holding Global X Active or generate 1.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Active vs. Rocky Mountain Liquor
Performance |
| Timeline |
| Global X Active |
| Rocky Mountain Liquor |
Global X and Rocky Mountain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Rocky Mountain
The main advantage of trading using opposite Global X and Rocky Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Rocky Mountain 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 Rocky Mountain will offset losses from the drop in Rocky Mountain's long position.| Global X vs. iShares SPTSX Canadian | Global X vs. Global X Active | Global X vs. BMO Covered Call | Global X vs. Forstrong Global Income |
| Rocky Mountain vs. Berkshire Hathaway CDR | Rocky Mountain vs. JPMorgan Chase Co | Rocky Mountain vs. Bank of America | Rocky Mountain vs. Alphabet Inc CDR |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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