Correlation Between Global X and Dynamic Active
Can any of the company-specific risk be diversified away by investing in both Global X and Dynamic Active 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 Dynamic Active 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 Dynamic Active Preferred, you can compare the effects of market volatilities on Global X and Dynamic Active 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 Dynamic Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Dynamic Active.
Diversification Opportunities for Global X and Dynamic Active
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Dynamic is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Global X Active and Dynamic Active Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynamic Active Preferred 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 Dynamic Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynamic Active Preferred has no effect on the direction of Global X i.e., Global X and Dynamic Active go up and down completely randomly.
Pair Corralation between Global X and Dynamic Active
Assuming the 90 days trading horizon Global X Active is expected to generate 1.28 times more return on investment than Dynamic Active. However, Global X is 1.28 times more volatile than Dynamic Active Preferred. It trades about 0.3 of its potential returns per unit of risk. Dynamic Active Preferred is currently generating about 0.29 per unit of risk. If you would invest 891.00 in Global X Active on August 31, 2024 and sell it today you would earn a total of 21.00 from holding Global X Active or generate 2.36% 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. Dynamic Active Preferred
Performance |
| Timeline |
| Global X Active |
| Dynamic Active Preferred |
Global X and Dynamic Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Dynamic Active
The main advantage of trading using opposite Global X and Dynamic Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Dynamic Active 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 Dynamic Active will offset losses from the drop in Dynamic Active's long position.| Global X vs. iShares SPTSX Canadian | Global X vs. BMO Covered Call | Global X vs. Forstrong Global Income | Global X vs. BMO Aggregate Bond |
| Dynamic Active vs. iShares SPTSX Canadian | Dynamic Active vs. Global X Active | Dynamic Active vs. BMO Covered Call | Dynamic Active vs. Forstrong Global Income |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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