Correlation Between Global X and Dimensional International
Can any of the company-specific risk be diversified away by investing in both Global X and Dimensional International 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 Dimensional International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X NASDAQ and Dimensional International Sustainability, you can compare the effects of market volatilities on Global X and Dimensional International 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 Dimensional International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Dimensional International.
Diversification Opportunities for Global X and Dimensional International
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Global and Dimensional is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Global X NASDAQ and Dimensional International Sust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional International 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 NASDAQ are associated (or correlated) with Dimensional International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional International has no effect on the direction of Global X i.e., Global X and Dimensional International go up and down completely randomly.
Pair Corralation between Global X and Dimensional International
Given the investment horizon of 90 days Global X NASDAQ is expected to generate 0.75 times more return on investment than Dimensional International. However, Global X NASDAQ is 1.33 times less risky than Dimensional International. It trades about 0.11 of its potential returns per unit of risk. Dimensional International Sustainability is currently generating about 0.05 per unit of risk. If you would invest 1,328 in Global X NASDAQ on November 2, 2024 and sell it today you would earn a total of 519.00 from holding Global X NASDAQ or generate 39.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X NASDAQ vs. Dimensional International Sust
Performance |
| Timeline |
| Global X NASDAQ |
| Dimensional International |
Global X and Dimensional International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Dimensional International
The main advantage of trading using opposite Global X and Dimensional International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Dimensional International 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 Dimensional International will offset losses from the drop in Dimensional International's long position.| Global X vs. Global X Russell | Global X vs. JPMorgan Equity Premium | Global X vs. Global X SP | Global X vs. NEOS ETF Trust |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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