Correlation Between Exchange Traded and Global X
Can any of the company-specific risk be diversified away by investing in both Exchange Traded 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 Exchange Traded and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exchange Traded Concepts and Global X FinTech, you can compare the effects of market volatilities on Exchange Traded 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 Exchange Traded with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exchange Traded and Global X.
Diversification Opportunities for Exchange Traded and Global X
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Exchange and Global is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Exchange Traded Concepts and Global X FinTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X FinTech and Exchange Traded 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 Exchange Traded Concepts 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 FinTech has no effect on the direction of Exchange Traded i.e., Exchange Traded and Global X go up and down completely randomly.
Pair Corralation between Exchange Traded and Global X
Given the investment horizon of 90 days Exchange Traded Concepts is expected to generate 1.09 times more return on investment than Global X. However, Exchange Traded is 1.09 times more volatile than Global X FinTech. It trades about 0.17 of its potential returns per unit of risk. Global X FinTech is currently generating about 0.08 per unit of risk. If you would invest 2,513 in Exchange Traded Concepts on August 30, 2024 and sell it today you would earn a total of 2,038 from holding Exchange Traded Concepts or generate 81.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 43.43% |
| Values | Daily Returns |
Exchange Traded Concepts vs. Global X FinTech
Performance |
| Timeline |
| Exchange Traded Concepts |
| Global X FinTech |
Exchange Traded and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exchange Traded and Global X
The main advantage of trading using opposite Exchange Traded and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exchange Traded 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.| Exchange Traded vs. Global X FinTech | Exchange Traded vs. iShares Genomics Immunology | Exchange Traded vs. ABIVAX Socit Anonyme | Exchange Traded vs. HUMANA INC |
| Global X vs. Amplify ETF Trust | Global X vs. Global X Cloud | Global X vs. Global X Internet | Global X vs. First Trust Cloud |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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