Correlation Between Global X and Utilities Select
Can any of the company-specific risk be diversified away by investing in both Global X and Utilities Select 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 Utilities Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Renewable and Utilities Select Sector, you can compare the effects of market volatilities on Global X and Utilities Select 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 Utilities Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Utilities Select.
Diversification Opportunities for Global X and Utilities Select
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and Utilities is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Global X Renewable and Utilities Select Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utilities Select Sector 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 Renewable are associated (or correlated) with Utilities Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utilities Select Sector has no effect on the direction of Global X i.e., Global X and Utilities Select go up and down completely randomly.
Pair Corralation between Global X and Utilities Select
Given the investment horizon of 90 days Global X Renewable is expected to under-perform the Utilities Select. In addition to that, Global X is 1.39 times more volatile than Utilities Select Sector. It trades about -0.12 of its total potential returns per unit of risk. Utilities Select Sector is currently generating about 0.19 per unit of volatility. If you would invest 7,928 in Utilities Select Sector on August 30, 2024 and sell it today you would earn a total of 362.00 from holding Utilities Select Sector or generate 4.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Global X Renewable vs. Utilities Select Sector
Performance |
| Timeline |
| Global X Renewable |
| Utilities Select Sector |
Global X and Utilities Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Utilities Select
The main advantage of trading using opposite Global X and Utilities Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Utilities Select 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 Utilities Select will offset losses from the drop in Utilities Select's long position.| Global X vs. Global X CleanTech | Global X vs. Global X Clean | Global X vs. Global X Wind | Global X vs. Global X Thematic |
| Utilities Select vs. Vanguard Utilities Index | Utilities Select vs. Altus Power | Utilities Select vs. Fidelity MSCI Utilities | Utilities Select vs. iShares Utilities ETF |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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