Correlation Between Global X and Mackenzie Aggregate
Can any of the company-specific risk be diversified away by investing in both Global X and Mackenzie Aggregate 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 Mackenzie Aggregate 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 Mackenzie Aggregate Bond, you can compare the effects of market volatilities on Global X and Mackenzie Aggregate 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 Mackenzie Aggregate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Mackenzie Aggregate.
Diversification Opportunities for Global X and Mackenzie Aggregate
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Mackenzie is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Global X 7 10 and Mackenzie Aggregate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mackenzie Aggregate Bond 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 Mackenzie Aggregate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mackenzie Aggregate Bond has no effect on the direction of Global X i.e., Global X and Mackenzie Aggregate go up and down completely randomly.
Pair Corralation between Global X and Mackenzie Aggregate
Assuming the 90 days trading horizon Global X 7 10 is expected to generate 1.33 times more return on investment than Mackenzie Aggregate. However, Global X is 1.33 times more volatile than Mackenzie Aggregate Bond. It trades about 0.02 of its potential returns per unit of risk. Mackenzie Aggregate Bond is currently generating about 0.02 per unit of risk. If you would invest 5,530 in Global X 7 10 on August 29, 2024 and sell it today you would earn a total of 325.00 from holding Global X 7 10 or generate 5.88% 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. Mackenzie Aggregate Bond
Performance |
| Timeline |
| Global X 7 |
| Mackenzie Aggregate Bond |
Global X and Mackenzie Aggregate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Mackenzie Aggregate
The main advantage of trading using opposite Global X and Mackenzie Aggregate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Mackenzie Aggregate 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 Mackenzie Aggregate will offset losses from the drop in Mackenzie Aggregate's long position.The idea behind Global X 7 10 and Mackenzie Aggregate Bond 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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