Correlation Between US Global and Industrial Select
Can any of the company-specific risk be diversified away by investing in both US Global and Industrial Select 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 US Global and Industrial Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Global Jets and Industrial Select Sector, you can compare the effects of market volatilities on US Global and Industrial Select 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 US Global with a short position of Industrial Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Global and Industrial Select.
Diversification Opportunities for US Global and Industrial Select
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between JETS and Industrial is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding US Global Jets and Industrial Select Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Select Sector and US Global 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 US Global Jets are associated (or correlated) with Industrial Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Select Sector has no effect on the direction of US Global i.e., US Global and Industrial Select go up and down completely randomly.
Pair Corralation between US Global and Industrial Select
Given the investment horizon of 90 days US Global is expected to generate 1.11 times less return on investment than Industrial Select. In addition to that, US Global is 1.76 times more volatile than Industrial Select Sector. It trades about 0.04 of its total potential returns per unit of risk. Industrial Select Sector is currently generating about 0.08 per unit of volatility. If you would invest 9,775 in Industrial Select Sector on November 19, 2024 and sell it today you would earn a total of 3,980 from holding Industrial Select Sector or generate 40.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Global Jets vs. Industrial Select Sector
Performance |
| Timeline |
| US Global Jets |
| Industrial Select Sector |
US Global and Industrial Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Global and Industrial Select
The main advantage of trading using opposite US Global and Industrial Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Global position performs unexpectedly, Industrial Select 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 Industrial Select will offset losses from the drop in Industrial Select's long position.| US Global vs. Invesco Solar ETF | US Global vs. iShares Global Clean | US Global vs. iShares Semiconductor ETF | US Global vs. Amplify ETF Trust |
| Industrial Select vs. Materials Select Sector | Industrial Select vs. Consumer Discretionary Select | Industrial Select vs. Consumer Staples Select | Industrial Select vs. Health Care Select |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |