Correlation Between Rocky Mountain and Global X
Can any of the company-specific risk be diversified away by investing in both Rocky Mountain 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 Rocky Mountain and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rocky Mountain Liquor and Global X Active, you can compare the effects of market volatilities on Rocky Mountain 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 Rocky Mountain with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocky Mountain and Global X.
Diversification Opportunities for Rocky Mountain and Global X
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Rocky and Global is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Rocky Mountain Liquor and Global X Active in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Active and Rocky Mountain 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 Rocky Mountain Liquor 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 Active has no effect on the direction of Rocky Mountain i.e., Rocky Mountain and Global X go up and down completely randomly.
Pair Corralation between Rocky Mountain and Global X
Assuming the 90 days horizon Rocky Mountain Liquor is expected to generate 8.96 times more return on investment than Global X. However, Rocky Mountain is 8.96 times more volatile than Global X Active. It trades about 0.04 of its potential returns per unit of risk. Global X Active is currently generating about 0.07 per unit of risk. If you would invest 12.00 in Rocky Mountain Liquor on September 2, 2024 and sell it today you would earn a total of 1.00 from holding Rocky Mountain Liquor or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Rocky Mountain Liquor vs. Global X Active
Performance |
| Timeline |
| Rocky Mountain Liquor |
| Global X Active |
Rocky Mountain and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rocky Mountain and Global X
The main advantage of trading using opposite Rocky Mountain and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocky Mountain 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.| Rocky Mountain vs. DelphX Capital Markets | Rocky Mountain vs. Citadel Income | Rocky Mountain vs. iShares Canadian HYBrid | Rocky Mountain vs. Altagas Cum Red |
| Global X vs. BMO Covered Call | Global X vs. Forstrong Global Income | Global X vs. BMO Aggregate Bond | Global X vs. iShares Canadian HYBrid |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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