Correlation Between Financial Select and Global X
Can any of the company-specific risk be diversified away by investing in both Financial Select 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 Financial Select and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial Select Sector and Global X Blockchain, you can compare the effects of market volatilities on Financial Select 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 Financial Select with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Select and Global X.
Diversification Opportunities for Financial Select and Global X
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Financial and Global is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Financial Select Sector and Global X Blockchain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Blockchain and Financial Select 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 Financial Select Sector 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 Blockchain has no effect on the direction of Financial Select i.e., Financial Select and Global X go up and down completely randomly.
Pair Corralation between Financial Select and Global X
Considering the 90-day investment horizon Financial Select is expected to generate 5.12 times less return on investment than Global X. But when comparing it to its historical volatility, Financial Select Sector is 4.98 times less risky than Global X. It trades about 0.08 of its potential returns per unit of risk. Global X Blockchain is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,650 in Global X Blockchain on August 23, 2024 and sell it today you would earn a total of 4,988 from holding Global X Blockchain or generate 302.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financial Select Sector vs. Global X Blockchain
Performance |
| Timeline |
| Financial Select Sector |
| Global X Blockchain |
Financial Select and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial Select and Global X
The main advantage of trading using opposite Financial Select and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Select 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.| Financial Select vs. Energy Select Sector | Financial Select vs. Technology Select Sector | Financial Select vs. Health Care Select | Financial Select vs. Industrial Select Sector |
| Global X vs. Vanguard Industrials Index | Global X vs. Vanguard Consumer Discretionary | Global X vs. Vanguard Materials Index | Global X vs. Vanguard Health Care |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |