Correlation Between Global X and USCF Midstream
Can any of the company-specific risk be diversified away by investing in both Global X and USCF Midstream 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 USCF Midstream into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X MLP and USCF Midstream Energy, you can compare the effects of market volatilities on Global X and USCF Midstream 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 USCF Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and USCF Midstream.
Diversification Opportunities for Global X and USCF Midstream
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and USCF is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Global X MLP and USCF Midstream Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USCF Midstream Energy 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 MLP are associated (or correlated) with USCF Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USCF Midstream Energy has no effect on the direction of Global X i.e., Global X and USCF Midstream go up and down completely randomly.
Pair Corralation between Global X and USCF Midstream
Given the investment horizon of 90 days Global X is expected to generate 1.1 times less return on investment than USCF Midstream. But when comparing it to its historical volatility, Global X MLP is 1.32 times less risky than USCF Midstream. It trades about 0.64 of its potential returns per unit of risk. USCF Midstream Energy is currently generating about 0.53 of returns per unit of risk over similar time horizon. If you would invest 4,695 in USCF Midstream Energy on September 1, 2024 and sell it today you would earn a total of 639.00 from holding USCF Midstream Energy or generate 13.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Global X MLP vs. USCF Midstream Energy
Performance |
| Timeline |
| Global X MLP |
| USCF Midstream Energy |
Global X and USCF Midstream Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and USCF Midstream
The main advantage of trading using opposite Global X and USCF Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, USCF Midstream 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 USCF Midstream will offset losses from the drop in USCF Midstream's long position.| Global X vs. Global X MLP | Global X vs. InfraCap MLP ETF | Global X vs. Alerian MLP ETF | Global X vs. First Trust North |
| USCF Midstream vs. First Trust North | USCF Midstream vs. Global X MLP | USCF Midstream vs. Tortoise North American | USCF Midstream vs. UBS AG London |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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