Correlation Between MORE and Global X
Can any of the company-specific risk be diversified away by investing in both MORE and Global X 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 MORE and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MORE and Global X Lithium, you can compare the effects of market volatilities on MORE and Global X 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 MORE with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of MORE and Global X.
Diversification Opportunities for MORE and Global X
Very weak diversification
The 3 months correlation between MORE and Global is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding MORE and Global X Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Lithium and MORE 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 MORE are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Lithium has no effect on the direction of MORE i.e., MORE and Global X go up and down completely randomly.
Pair Corralation between MORE and Global X
Given the investment horizon of 90 days MORE is expected to generate 0.27 times more return on investment than Global X. However, MORE is 3.68 times less risky than Global X. It trades about 0.35 of its potential returns per unit of risk. Global X Lithium is currently generating about -0.04 per unit of risk. If you would invest 2,278 in MORE on August 28, 2024 and sell it today you would earn a total of 59.00 from holding MORE or generate 2.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 3.95% |
| Values | Daily Returns |
MORE vs. Global X Lithium
Performance |
| Timeline |
| MORE |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Global X Lithium |
MORE and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MORE and Global X
The main advantage of trading using opposite MORE and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MORE position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.The idea behind MORE and Global X Lithium pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Global X vs. Invesco Solar ETF | Global X vs. Albemarle Corp | Global X vs. Lithium Americas Corp | Global X vs. iShares Global Clean |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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