Correlation Between Global X and Principal Exchange
Can any of the company-specific risk be diversified away by investing in both Global X and Principal Exchange 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 Principal Exchange 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 Principal Exchange Traded Funds, you can compare the effects of market volatilities on Global X and Principal Exchange 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 Principal Exchange. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Principal Exchange.
Diversification Opportunities for Global X and Principal Exchange
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and Principal is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Global X Preferred and Principal Exchange Traded Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Exchange 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 Principal Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal Exchange has no effect on the direction of Global X i.e., Global X and Principal Exchange go up and down completely randomly.
Pair Corralation between Global X and Principal Exchange
Given the investment horizon of 90 days Global X Preferred is expected to generate 2.75 times more return on investment than Principal Exchange. However, Global X is 2.75 times more volatile than Principal Exchange Traded Funds. It trades about 0.1 of its potential returns per unit of risk. Principal Exchange Traded Funds is currently generating about 0.24 per unit of risk. If you would invest 1,921 in Global X Preferred on September 1, 2024 and sell it today you would earn a total of 118.00 from holding Global X Preferred or generate 6.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Global X Preferred vs. Principal Exchange Traded Fund
Performance |
| Timeline |
| Global X Preferred |
| Principal Exchange |
Global X and Principal Exchange Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Principal Exchange
The main advantage of trading using opposite Global X and Principal Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Principal Exchange 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 Principal Exchange will offset losses from the drop in Principal Exchange's long position.| Global X vs. VanEck Preferred Securities | Global X vs. Global X SuperIncome | Global X vs. Virtus InfraCap Preferred | Global X vs. SPDR ICE Preferred |
| Principal Exchange vs. Principal Spectrum Preferred | Principal Exchange vs. AAM Low Duration | Principal Exchange vs. Global X Variable | Principal Exchange vs. PGIM Active High |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |