Correlation Between United States and Global X
Can any of the company-specific risk be diversified away by investing in both United States 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 United States and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Global X Funds, you can compare the effects of market volatilities on United States 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 United States with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Global X.
Diversification Opportunities for United States and Global X
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Global is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds and United States 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 United States Steel 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 Funds has no effect on the direction of United States i.e., United States and Global X go up and down completely randomly.
Pair Corralation between United States and Global X
Assuming the 90 days trading horizon United States Steel is expected to generate 2.42 times more return on investment than Global X. However, United States is 2.42 times more volatile than Global X Funds. It trades about 0.04 of its potential returns per unit of risk. Global X Funds is currently generating about 0.08 per unit of risk. If you would invest 15,024 in United States Steel on October 27, 2024 and sell it today you would earn a total of 7,151 from holding United States Steel or generate 47.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.73% |
| Values | Daily Returns |
United States Steel vs. Global X Funds
Performance |
| Timeline |
| United States Steel |
| Global X Funds |
United States and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Global X
The main advantage of trading using opposite United States and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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.| United States vs. Brpr Corporate Offices | United States vs. Nordon Indstrias Metalrgicas | United States vs. salesforce inc | United States vs. MAHLE Metal Leve |
| Global X vs. Zoom Video Communications | Global X vs. Nordon Indstrias Metalrgicas | Global X vs. Marfrig Global Foods | Global X vs. American Airlines Group |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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