Correlation Between International Drawdown and Global X
Can any of the company-specific risk be diversified away by investing in both International Drawdown and Global X 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 International Drawdown and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Drawdown Managed and Global X Funds, you can compare the effects of market volatilities on International Drawdown and Global X 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 International Drawdown with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Drawdown and Global X.
Diversification Opportunities for International Drawdown and Global X
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and Global is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding International Drawdown Managed and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds and International Drawdown 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 International Drawdown Managed are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Funds has no effect on the direction of International Drawdown i.e., International Drawdown and Global X go up and down completely randomly.
Pair Corralation between International Drawdown and Global X
Given the investment horizon of 90 days International Drawdown Managed is expected to under-perform the Global X. But the etf apears to be less risky and, when comparing its historical volatility, International Drawdown Managed is 1.46 times less risky than Global X. The etf trades about -0.14 of its potential returns per unit of risk. The Global X Funds is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 2,767 in Global X Funds on August 30, 2024 and sell it today you would earn a total of 202.00 from holding Global X Funds or generate 7.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Drawdown Managed vs. Global X Funds
Performance |
| Timeline |
| International Drawdown |
| Global X Funds |
International Drawdown and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Drawdown and Global X
The main advantage of trading using opposite International Drawdown and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Drawdown position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| International Drawdown vs. FT Vest Equity | International Drawdown vs. Zillow Group Class | International Drawdown vs. Northern Lights | International Drawdown vs. VanEck Vectors Moodys |
| Global X vs. Global X SP | Global X vs. Amplify CWP Enhanced | Global X vs. Global X Russell | Global X vs. JPMorgan Nasdaq Equity |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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