Correlation Between Global X and Desjardins American
Can any of the company-specific risk be diversified away by investing in both Global X and Desjardins American 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 American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X SP and Desjardins American Equity, you can compare the effects of market volatilities on Global X and Desjardins American 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 American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Desjardins American.
Diversification Opportunities for Global X and Desjardins American
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Global and Desjardins is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Global X SP and Desjardins American Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desjardins American 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 SP are associated (or correlated) with Desjardins American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desjardins American has no effect on the direction of Global X i.e., Global X and Desjardins American go up and down completely randomly.
Pair Corralation between Global X and Desjardins American
Assuming the 90 days trading horizon Global X is expected to generate 1.32 times less return on investment than Desjardins American. But when comparing it to its historical volatility, Global X SP is 1.11 times less risky than Desjardins American. It trades about 0.16 of its potential returns per unit of risk. Desjardins American Equity is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,972 in Desjardins American Equity on September 2, 2024 and sell it today you would earn a total of 484.00 from holding Desjardins American Equity or generate 24.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 42.47% |
| Values | Daily Returns |
Global X SP vs. Desjardins American Equity
Performance |
| Timeline |
| Global X SP |
| Desjardins American |
Global X and Desjardins American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Desjardins American
The main advantage of trading using opposite Global X and Desjardins American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Desjardins American 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 American will offset losses from the drop in Desjardins American's long position.| Global X vs. Global X SPTSX | Global X vs. Vanguard FTSE Developed | Global X vs. Global X Active | Global X vs. iShares SPTSX Capped |
| Desjardins American vs. Desjardins RI Canada | Desjardins American vs. Desjardins RI Canada | Desjardins American vs. Desjardins Canadian Corporate | Desjardins American 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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