Correlation Between Global X and ETF Series
Can any of the company-specific risk be diversified away by investing in both Global X and ETF Series 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 ETF Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Preferred and ETF Series Solutions, you can compare the effects of market volatilities on Global X and ETF Series 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 ETF Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and ETF Series.
Diversification Opportunities for Global X and ETF Series
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and ETF is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Global X Preferred and ETF Series Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Series Solutions 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 Preferred are associated (or correlated) with ETF Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Series Solutions has no effect on the direction of Global X i.e., Global X and ETF Series go up and down completely randomly.
Pair Corralation between Global X and ETF Series
Given the investment horizon of 90 days Global X is expected to generate 1.77 times less return on investment than ETF Series. But when comparing it to its historical volatility, Global X Preferred is 1.99 times less risky than ETF Series. It trades about 0.09 of its potential returns per unit of risk. ETF Series Solutions is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,825 in ETF Series Solutions on August 25, 2024 and sell it today you would earn a total of 526.00 from holding ETF Series Solutions or generate 18.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Preferred vs. ETF Series Solutions
Performance |
| Timeline |
| Global X Preferred |
| ETF Series Solutions |
Global X and ETF Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and ETF Series
The main advantage of trading using opposite Global X and ETF Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, ETF Series 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 ETF Series will offset losses from the drop in ETF Series' long position.| Global X vs. ETF Series Solutions | Global X vs. Aquagold International | Global X vs. Morningstar Unconstrained Allocation | Global X vs. High Yield Municipal Fund |
| ETF Series vs. Tidal Trust II | ETF Series vs. Tidal Trust II | ETF Series vs. First Trust Dorsey | ETF Series vs. Direxion Daily META |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |