Correlation Between Global X and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Global X and SPDR SP 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 SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X AgTech and SPDR SP Biotech, you can compare the effects of market volatilities on Global X and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and SPDR SP.
Diversification Opportunities for Global X and SPDR SP
Significant diversification
The 3 months correlation between Global and SPDR is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Global X AgTech and SPDR SP Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Biotech 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 AgTech are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Biotech has no effect on the direction of Global X i.e., Global X and SPDR SP go up and down completely randomly.
Pair Corralation between Global X and SPDR SP
Given the investment horizon of 90 days Global X AgTech is expected to generate 0.65 times more return on investment than SPDR SP. However, Global X AgTech is 1.55 times less risky than SPDR SP. It trades about 0.02 of its potential returns per unit of risk. SPDR SP Biotech is currently generating about -0.02 per unit of risk. If you would invest 1,030 in Global X AgTech on August 25, 2024 and sell it today you would earn a total of 5.00 from holding Global X AgTech or generate 0.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X AgTech vs. SPDR SP Biotech
Performance |
| Timeline |
| Global X AgTech |
| SPDR SP Biotech |
Global X and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and SPDR SP
The main advantage of trading using opposite Global X and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP's long position.| Global X vs. Main Sector Rotation | Global X vs. Global X Thematic | Global X vs. Franklin Exponential Data | Global X vs. Goldman Sachs Innovate |
| SPDR SP vs. Global X Clean | SPDR SP vs. Global X Renewable | SPDR SP vs. Global X Thematic | SPDR SP vs. Global X AgTech |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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