Correlation Between Global X and Accelerate Arbitrage
Can any of the company-specific risk be diversified away by investing in both Global X and Accelerate Arbitrage 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 Accelerate Arbitrage 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 Accelerate Arbitrage, you can compare the effects of market volatilities on Global X and Accelerate Arbitrage 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 Accelerate Arbitrage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Accelerate Arbitrage.
Diversification Opportunities for Global X and Accelerate Arbitrage
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Accelerate is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Global X Active and Accelerate Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accelerate Arbitrage 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 Accelerate Arbitrage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accelerate Arbitrage has no effect on the direction of Global X i.e., Global X and Accelerate Arbitrage go up and down completely randomly.
Pair Corralation between Global X and Accelerate Arbitrage
Assuming the 90 days trading horizon Global X is expected to generate 1.8 times less return on investment than Accelerate Arbitrage. But when comparing it to its historical volatility, Global X Active is 5.71 times less risky than Accelerate Arbitrage. It trades about 0.12 of its potential returns per unit of risk. Accelerate Arbitrage is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,611 in Accelerate Arbitrage on August 28, 2024 and sell it today you would earn a total of 13.00 from holding Accelerate Arbitrage or generate 0.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Active vs. Accelerate Arbitrage
Performance |
| Timeline |
| Global X Active |
| Accelerate Arbitrage |
Global X and Accelerate Arbitrage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Accelerate Arbitrage
The main advantage of trading using opposite Global X and Accelerate Arbitrage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Accelerate Arbitrage 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 Accelerate Arbitrage will offset losses from the drop in Accelerate Arbitrage'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 |
| Accelerate Arbitrage vs. Global X Active | Accelerate Arbitrage vs. Global X Active | Accelerate Arbitrage vs. Global X Active | Accelerate Arbitrage vs. Global X Active |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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