Correlation Between Global X and Brompton Flaherty
Can any of the company-specific risk be diversified away by investing in both Global X and Brompton Flaherty 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 Brompton Flaherty 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 Brompton Flaherty Crumrine, you can compare the effects of market volatilities on Global X and Brompton Flaherty 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 Brompton Flaherty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Brompton Flaherty.
Diversification Opportunities for Global X and Brompton Flaherty
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Global and Brompton is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Global X Active and Brompton Flaherty Crumrine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brompton Flaherty 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 Brompton Flaherty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brompton Flaherty has no effect on the direction of Global X i.e., Global X and Brompton Flaherty go up and down completely randomly.
Pair Corralation between Global X and Brompton Flaherty
Assuming the 90 days trading horizon Global X Active is expected to generate 1.1 times more return on investment than Brompton Flaherty. However, Global X is 1.1 times more volatile than Brompton Flaherty Crumrine. It trades about 0.11 of its potential returns per unit of risk. Brompton Flaherty Crumrine is currently generating about 0.07 per unit of risk. If you would invest 677.00 in Global X Active on September 4, 2024 and sell it today you would earn a total of 226.00 from holding Global X Active or generate 33.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Active vs. Brompton Flaherty Crumrine
Performance |
| Timeline |
| Global X Active |
| Brompton Flaherty |
Global X and Brompton Flaherty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Brompton Flaherty
The main advantage of trading using opposite Global X and Brompton Flaherty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Brompton Flaherty 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 Brompton Flaherty will offset losses from the drop in Brompton Flaherty's long position.| Global X vs. BMO Laddered Preferred | Global X vs. iShares SPTSX Canadian | Global X vs. RBC Quant Canadian |
| Brompton Flaherty vs. BMO Laddered Preferred | Brompton Flaherty vs. iShares SPTSX Canadian | Brompton Flaherty vs. RBC Quant Canadian |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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