Correlation Between Global X and US Treasury
Can any of the company-specific risk be diversified away by investing in both Global X and US Treasury 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 US Treasury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Funds and US Treasury 5, you can compare the effects of market volatilities on Global X and US Treasury 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 US Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and US Treasury.
Diversification Opportunities for Global X and US Treasury
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Global and UFIV is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds and US Treasury 5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Treasury 5 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 Funds are associated (or correlated) with US Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Treasury 5 has no effect on the direction of Global X i.e., Global X and US Treasury go up and down completely randomly.
Pair Corralation between Global X and US Treasury
Given the investment horizon of 90 days Global X Funds is expected to generate 496.25 times more return on investment than US Treasury. However, Global X is 496.25 times more volatile than US Treasury 5. It trades about 0.13 of its potential returns per unit of risk. US Treasury 5 is currently generating about 0.1 per unit of risk. If you would invest 0.00 in Global X Funds on August 28, 2024 and sell it today you would earn a total of 4,831 from holding Global X Funds or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 44.8% |
| Values | Daily Returns |
Global X Funds vs. US Treasury 5
Performance |
| Timeline |
| Global X Funds |
| US Treasury 5 |
Global X and US Treasury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and US Treasury
The main advantage of trading using opposite Global X and US Treasury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, US Treasury 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 US Treasury will offset losses from the drop in US Treasury's long position.| Global X vs. Blackrock Muniholdings Ny | Global X vs. MFS Investment Grade | Global X vs. Eaton Vance National | Global X vs. Invesco High Income |
| US Treasury vs. Global X Funds | US Treasury vs. US Treasury 12 | US Treasury vs. Tidal Trust II | US Treasury vs. Franklin Liberty Treasury |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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