Correlation Between ETF Series and Global X
Can any of the company-specific risk be diversified away by investing in both ETF Series 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 ETF Series and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETF Series Solutions and Global X NASDAQ, you can compare the effects of market volatilities on ETF Series 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 ETF Series with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETF Series and Global X.
Diversification Opportunities for ETF Series and Global X
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ETF and Global is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding ETF Series Solutions and Global X NASDAQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X NASDAQ and ETF Series 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 ETF Series Solutions 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 NASDAQ has no effect on the direction of ETF Series i.e., ETF Series and Global X go up and down completely randomly.
Pair Corralation between ETF Series and Global X
Given the investment horizon of 90 days ETF Series is expected to generate 1.18 times less return on investment than Global X. But when comparing it to its historical volatility, ETF Series Solutions is 1.05 times less risky than Global X. It trades about 0.08 of its potential returns per unit of risk. Global X NASDAQ is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,196 in Global X NASDAQ on August 26, 2024 and sell it today you would earn a total of 922.00 from holding Global X NASDAQ or generate 41.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETF Series Solutions vs. Global X NASDAQ
Performance |
| Timeline |
| ETF Series Solutions |
| Global X NASDAQ |
ETF Series and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETF Series and Global X
The main advantage of trading using opposite ETF Series and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETF Series 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.| ETF Series vs. FT Vest Equity | ETF Series vs. Northern Lights | ETF Series vs. Dimensional International High | ETF Series vs. First Trust Exchange Traded |
| Global X vs. FT Vest Equity | Global X vs. Northern Lights | Global X vs. Dimensional International High | Global X vs. First Trust Exchange Traded |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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