Correlation Between VanEck Green and Global X
Can any of the company-specific risk be diversified away by investing in both VanEck Green 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 VanEck Green and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck Green Infrastructure and Global X Infrastructure, you can compare the effects of market volatilities on VanEck Green 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 VanEck Green with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Green and Global X.
Diversification Opportunities for VanEck Green and Global X
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between VanEck and Global is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Green Infrastructure and Global X Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Infrastructure and VanEck Green 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 VanEck Green Infrastructure 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 Infrastructure has no effect on the direction of VanEck Green i.e., VanEck Green and Global X go up and down completely randomly.
Pair Corralation between VanEck Green and Global X
Given the investment horizon of 90 days VanEck Green is expected to generate 24.35 times less return on investment than Global X. In addition to that, VanEck Green is 1.19 times more volatile than Global X Infrastructure. It trades about 0.0 of its total potential returns per unit of risk. Global X Infrastructure is currently generating about 0.09 per unit of volatility. If you would invest 2,700 in Global X Infrastructure on August 27, 2024 and sell it today you would earn a total of 1,838 from holding Global X Infrastructure or generate 68.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck Green Infrastructure vs. Global X Infrastructure
Performance |
| Timeline |
| VanEck Green Infrast |
| Global X Infrastructure |
VanEck Green and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Green and Global X
The main advantage of trading using opposite VanEck Green and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Green 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.The idea behind VanEck Green Infrastructure and Global X Infrastructure pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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