Correlation Between Global X and Desjardins Canadian
Can any of the company-specific risk be diversified away by investing in both Global X and Desjardins Canadian 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 Desjardins Canadian 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 Desjardins Canadian Preferred, you can compare the effects of market volatilities on Global X and Desjardins Canadian 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 Desjardins Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Desjardins Canadian.
Diversification Opportunities for Global X and Desjardins Canadian
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and Desjardins is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Global X Active and Desjardins Canadian Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desjardins Canadian 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 Desjardins Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desjardins Canadian has no effect on the direction of Global X i.e., Global X and Desjardins Canadian go up and down completely randomly.
Pair Corralation between Global X and Desjardins Canadian
Assuming the 90 days trading horizon Global X Active is expected to generate 0.85 times more return on investment than Desjardins Canadian. However, Global X Active is 1.18 times less risky than Desjardins Canadian. It trades about 0.11 of its potential returns per unit of risk. Desjardins Canadian Preferred is currently generating about 0.08 per unit of risk. If you would invest 686.00 in Global X Active on August 30, 2024 and sell it today you would earn a total of 220.00 from holding Global X Active or generate 32.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Active vs. Desjardins Canadian Preferred
Performance |
| Timeline |
| Global X Active |
| Desjardins Canadian |
Global X and Desjardins Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Desjardins Canadian
The main advantage of trading using opposite Global X and Desjardins Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Desjardins Canadian 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 Desjardins Canadian will offset losses from the drop in Desjardins Canadian's long position.The idea behind Global X Active and Desjardins Canadian Preferred pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Desjardins Canadian vs. Desjardins Canadian Short | Desjardins Canadian vs. Desjardins Canadian Universe | Desjardins Canadian vs. Desjardins 1 5 Year | Desjardins Canadian vs. Desjardins 1 5 Year |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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