Correlation Between TD Global and Global X
Can any of the company-specific risk be diversified away by investing in both TD Global 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 TD Global and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TD Global Technology and Global X Natural, you can compare the effects of market volatilities on TD Global 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 TD Global with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of TD Global and Global X.
Diversification Opportunities for TD Global and Global X
Excellent diversification
The 3 months correlation between TEC and Global is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding TD Global Technology and Global X Natural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Natural and TD Global 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 TD Global Technology 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 Natural has no effect on the direction of TD Global i.e., TD Global and Global X go up and down completely randomly.
Pair Corralation between TD Global and Global X
Assuming the 90 days trading horizon TD Global is expected to generate 2.56 times less return on investment than Global X. But when comparing it to its historical volatility, TD Global Technology is 2.36 times less risky than Global X. It trades about 0.13 of its potential returns per unit of risk. Global X Natural is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 710.00 in Global X Natural on August 28, 2024 and sell it today you would earn a total of 59.00 from holding Global X Natural or generate 8.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TD Global Technology vs. Global X Natural
Performance |
| Timeline |
| TD Global Technology |
| Global X Natural |
TD Global and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TD Global and Global X
The main advantage of trading using opposite TD Global and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TD Global 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.| TD Global vs. iShares Core Equity | TD Global vs. Vanguard All Equity ETF | TD Global vs. iShares SPTSX Capped | TD Global vs. Vanguard Growth Portfolio |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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