Correlation Between Financial Investors and Global X
Can any of the company-specific risk be diversified away by investing in both Financial Investors 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 Financial Investors and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial Investors Trust and Global X Funds, you can compare the effects of market volatilities on Financial Investors 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 Financial Investors with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Investors and Global X.
Diversification Opportunities for Financial Investors and Global X
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Financial and Global is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Financial Investors Trust 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 Financial Investors 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 Financial Investors Trust 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 Financial Investors i.e., Financial Investors and Global X go up and down completely randomly.
Pair Corralation between Financial Investors and Global X
Assuming the 90 days horizon Financial Investors Trust is expected to generate 0.87 times more return on investment than Global X. However, Financial Investors Trust is 1.14 times less risky than Global X. It trades about 0.09 of its potential returns per unit of risk. Global X Funds is currently generating about 0.02 per unit of risk. If you would invest 2,051 in Financial Investors Trust on September 1, 2024 and sell it today you would earn a total of 32.00 from holding Financial Investors Trust or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Financial Investors Trust vs. Global X Funds
Performance |
| Timeline |
| Financial Investors Trust |
| Global X Funds |
Financial Investors and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial Investors and Global X
The main advantage of trading using opposite Financial Investors and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Investors 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.| Financial Investors vs. Alpskotak India Growth | Financial Investors vs. Alpskotak India Growth | Financial Investors vs. Alpskotak India Growth | Financial Investors vs. Alpskotak India Growth |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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