Correlation Between Global X and SPDR Kensho
Can any of the company-specific risk be diversified away by investing in both Global X and SPDR Kensho 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 SPDR Kensho into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Infrastructure and SPDR Kensho Intelligent, you can compare the effects of market volatilities on Global X and SPDR Kensho 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 SPDR Kensho. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and SPDR Kensho.
Diversification Opportunities for Global X and SPDR Kensho
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and SPDR is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Global X Infrastructure and SPDR Kensho Intelligent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Kensho Intelligent 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 Infrastructure are associated (or correlated) with SPDR Kensho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Kensho Intelligent has no effect on the direction of Global X i.e., Global X and SPDR Kensho go up and down completely randomly.
Pair Corralation between Global X and SPDR Kensho
Given the investment horizon of 90 days Global X Infrastructure is expected to generate 1.24 times more return on investment than SPDR Kensho. However, Global X is 1.24 times more volatile than SPDR Kensho Intelligent. It trades about 0.2 of its potential returns per unit of risk. SPDR Kensho Intelligent is currently generating about 0.19 per unit of risk. If you would invest 4,046 in Global X Infrastructure on August 26, 2024 and sell it today you would earn a total of 492.00 from holding Global X Infrastructure or generate 12.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Infrastructure vs. SPDR Kensho Intelligent
Performance |
| Timeline |
| Global X Infrastructure |
| SPDR Kensho Intelligent |
Global X and SPDR Kensho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and SPDR Kensho
The main advantage of trading using opposite Global X and SPDR Kensho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, SPDR Kensho 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 SPDR Kensho will offset losses from the drop in SPDR Kensho's long position.| Global X vs. iShares Infrastructure ETF | Global X vs. Global X Cloud | Global X vs. Global X Cybersecurity | Global X vs. Invesco Dynamic Leisure |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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