Correlation Between WBI Power and Global X
Can any of the company-specific risk be diversified away by investing in both WBI Power 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 WBI Power and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WBI Power Factor and Global X MSCI, you can compare the effects of market volatilities on WBI Power 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 WBI Power with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of WBI Power and Global X.
Diversification Opportunities for WBI Power and Global X
Very good diversification
The 3 months correlation between WBI and Global is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding WBI Power Factor and Global X MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X MSCI and WBI Power 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 WBI Power Factor 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 MSCI has no effect on the direction of WBI Power i.e., WBI Power and Global X go up and down completely randomly.
Pair Corralation between WBI Power and Global X
Given the investment horizon of 90 days WBI Power Factor is expected to generate 1.07 times more return on investment than Global X. However, WBI Power is 1.07 times more volatile than Global X MSCI. It trades about 0.13 of its potential returns per unit of risk. Global X MSCI is currently generating about -0.11 per unit of risk. If you would invest 3,085 in WBI Power Factor on August 24, 2024 and sell it today you would earn a total of 94.00 from holding WBI Power Factor or generate 3.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WBI Power Factor vs. Global X MSCI
Performance |
| Timeline |
| WBI Power Factor |
| Global X MSCI |
WBI Power and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WBI Power and Global X
The main advantage of trading using opposite WBI Power and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WBI Power 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.| WBI Power vs. Franklin Templeton ETF | WBI Power vs. Altrius Global Dividend | WBI Power vs. Invesco Exchange Traded | WBI Power vs. Franklin International Core |
| Global X vs. Dimensional Targeted Value | Global X vs. Dimensional Small Cap | Global X vs. Dimensional Marketwide Value | Global X vs. Dimensional Core Equity |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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