Correlation Between Global X and Health Care
Can any of the company-specific risk be diversified away by investing in both Global X and Health Care 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 Health Care 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 Health Care Select, you can compare the effects of market volatilities on Global X and Health Care 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 Health Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Health Care.
Diversification Opportunities for Global X and Health Care
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Global and Health is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Global X AgTech and Health Care Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Care Select 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 Health Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Care Select has no effect on the direction of Global X i.e., Global X and Health Care go up and down completely randomly.
Pair Corralation between Global X and Health Care
Given the investment horizon of 90 days Global X AgTech is expected to generate 1.46 times more return on investment than Health Care. However, Global X is 1.46 times more volatile than Health Care Select. It trades about 0.02 of its potential returns per unit of risk. Health Care Select is currently generating about -0.2 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. Health Care Select
Performance |
| Timeline |
| Global X AgTech |
| Health Care Select |
Global X and Health Care Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Health Care
The main advantage of trading using opposite Global X and Health Care positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Health Care 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 Health Care will offset losses from the drop in Health Care's long position.| Global X vs. Global X Clean | Global X vs. Global X Hydrogen | Global X vs. Global X Renewable | Global X vs. Global X Wind |
| Health Care vs. Global X Clean | Health Care vs. Global X Renewable | Health Care vs. Global X Thematic | Health Care 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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