Correlation Between Global X and CI Enhanced
Can any of the company-specific risk be diversified away by investing in both Global X and CI Enhanced 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 CI Enhanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X 7 10 and CI Enhanced Government, you can compare the effects of market volatilities on Global X and CI Enhanced 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 CI Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and CI Enhanced.
Diversification Opportunities for Global X and CI Enhanced
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and FGO is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Global X 7 10 and CI Enhanced Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Enhanced Government 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 7 10 are associated (or correlated) with CI Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Enhanced Government has no effect on the direction of Global X i.e., Global X and CI Enhanced go up and down completely randomly.
Pair Corralation between Global X and CI Enhanced
Assuming the 90 days trading horizon Global X 7 10 is expected to generate 1.25 times more return on investment than CI Enhanced. However, Global X is 1.25 times more volatile than CI Enhanced Government. It trades about 0.02 of its potential returns per unit of risk. CI Enhanced Government is currently generating about 0.02 per unit of risk. If you would invest 5,620 in Global X 7 10 on August 28, 2024 and sell it today you would earn a total of 235.00 from holding Global X 7 10 or generate 4.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X 7 10 vs. CI Enhanced Government
Performance |
| Timeline |
| Global X 7 |
| CI Enhanced Government |
Global X and CI Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and CI Enhanced
The main advantage of trading using opposite Global X and CI Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, CI Enhanced 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 CI Enhanced will offset losses from the drop in CI Enhanced's long position.The idea behind Global X 7 10 and CI Enhanced Government 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.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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |