Correlation Between US Treasury and Global X
Can any of the company-specific risk be diversified away by investing in both US Treasury 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 US Treasury and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Treasury 12 and Global X Funds, you can compare the effects of market volatilities on US Treasury 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 US Treasury with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Treasury and Global X.
Diversification Opportunities for US Treasury and Global X
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between OBIL and Global is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding US Treasury 12 and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds and US Treasury 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 US Treasury 12 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 Funds has no effect on the direction of US Treasury i.e., US Treasury and Global X go up and down completely randomly.
Pair Corralation between US Treasury and Global X
Given the investment horizon of 90 days US Treasury is expected to generate 3.86 times less return on investment than Global X. But when comparing it to its historical volatility, US Treasury 12 is 27.87 times less risky than Global X. It trades about 0.44 of its potential returns per unit of risk. Global X Funds is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,668 in Global X Funds on August 29, 2024 and sell it today you would earn a total of 54.00 from holding Global X Funds or generate 1.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Treasury 12 vs. Global X Funds
Performance |
| Timeline |
| US Treasury 12 |
| Global X Funds |
US Treasury and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Treasury and Global X
The main advantage of trading using opposite US Treasury and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Treasury 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.| US Treasury vs. Rbb Fund | US Treasury vs. Rbb Fund | US Treasury vs. Rbb Fund | US Treasury vs. US Treasury 6 |
| Global X vs. Global X Funds | Global X vs. US Treasury 12 | Global X vs. Tidal Trust II | Global X 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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