Correlation Between Global X and Technology Select
Can any of the company-specific risk be diversified away by investing in both Global X and Technology 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 Global X and Technology Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Lithium and Technology Select Sector, you can compare the effects of market volatilities on Global X and Technology 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 Global X with a short position of Technology Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Technology Select.
Diversification Opportunities for Global X and Technology Select
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Global and Technology is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Global X Lithium and Technology Select Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technology Select Sector 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 Lithium are associated (or correlated) with Technology Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technology Select Sector has no effect on the direction of Global X i.e., Global X and Technology Select go up and down completely randomly.
Pair Corralation between Global X and Technology Select
Considering the 90-day investment horizon Global X is expected to generate 3.67 times less return on investment than Technology Select. In addition to that, Global X is 1.41 times more volatile than Technology Select Sector. It trades about 0.01 of its total potential returns per unit of risk. Technology Select Sector is currently generating about 0.04 per unit of volatility. If you would invest 20,305 in Technology Select Sector on November 3, 2024 and sell it today you would earn a total of 2,776 from holding Technology Select Sector or generate 13.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Lithium vs. Technology Select Sector
Performance |
| Timeline |
| Global X Lithium |
| Technology Select Sector |
Global X and Technology Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Technology Select
The main advantage of trading using opposite Global X and Technology Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Technology 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 Technology Select will offset losses from the drop in Technology Select's long position.| Global X vs. Invesco Solar ETF | Global X vs. Albemarle Corp | Global X vs. Lithium Americas Corp | Global X vs. iShares Global Clean |
| Technology Select vs. iShares Exponential Technologies | Technology Select vs. ALPS Disruptive Technologies | Technology Select vs. First Trust Dow | Technology Select vs. Fidelity MSCI Information |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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