Correlation Between Communication Services and Global X
Can any of the company-specific risk be diversified away by investing in both Communication Services 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 Communication Services and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Communication Services Select and Global X Social, you can compare the effects of market volatilities on Communication Services 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 Communication Services with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Communication Services and Global X.
Diversification Opportunities for Communication Services and Global X
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Communication and Global is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Communication Services Select and Global X Social in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Social and Communication Services 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 Communication Services Select 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 Social has no effect on the direction of Communication Services i.e., Communication Services and Global X go up and down completely randomly.
Pair Corralation between Communication Services and Global X
Considering the 90-day investment horizon Communication Services Select is expected to under-perform the Global X. But the etf apears to be less risky and, when comparing its historical volatility, Communication Services Select is 1.55 times less risky than Global X. The etf trades about -0.05 of its potential returns per unit of risk. The Global X Social is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 4,341 in Global X Social on October 23, 2024 and sell it today you would lose (3.00) from holding Global X Social or give up 0.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Communication Services Select vs. Global X Social
Performance |
| Timeline |
| Communication Services |
| Global X Social |
Communication Services and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Communication Services and Global X
The main advantage of trading using opposite Communication Services and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Communication Services 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.| Communication Services vs. The Real Estate | Communication Services vs. Consumer Discretionary Select | Communication Services vs. Materials Select Sector | Communication Services vs. Industrial Select Sector |
| Global X vs. Global X Millennials | Global X vs. First Trust Cloud | Global X vs. Global X FinTech | Global X vs. Invesco NASDAQ Internet |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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