Correlation Between Global X and Freedom Day
Can any of the company-specific risk be diversified away by investing in both Global X and Freedom Day 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 Global X and Freedom Day into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X SP and Freedom Day Dividend, you can compare the effects of market volatilities on Global X and Freedom Day 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 Global X with a short position of Freedom Day. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Freedom Day.
Diversification Opportunities for Global X and Freedom Day
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and Freedom is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Global X SP and Freedom Day Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Day Dividend and Global X 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 Global X SP are associated (or correlated) with Freedom Day. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Day Dividend has no effect on the direction of Global X i.e., Global X and Freedom Day go up and down completely randomly.
Pair Corralation between Global X and Freedom Day
Considering the 90-day investment horizon Global X SP is expected to generate 0.87 times more return on investment than Freedom Day. However, Global X SP is 1.14 times less risky than Freedom Day. It trades about 0.14 of its potential returns per unit of risk. Freedom Day Dividend is currently generating about 0.12 per unit of risk. If you would invest 2,972 in Global X SP on September 1, 2024 and sell it today you would earn a total of 408.00 from holding Global X SP or generate 13.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Global X SP vs. Freedom Day Dividend
Performance |
| Timeline |
| Global X SP |
| Freedom Day Dividend |
Global X and Freedom Day Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Freedom Day
The main advantage of trading using opposite Global X and Freedom Day positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Freedom Day 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 Freedom Day will offset losses from the drop in Freedom Day's long position.| Global X vs. Core Alternative ETF | Global X vs. Invesco SP 500 | Global X vs. ETF Series Solutions | Global X vs. WisdomTree Target Range |
| Freedom Day vs. iShares Core SP | Freedom Day vs. iShares Core MSCI | Freedom Day vs. iShares Broad USD | Freedom Day vs. iShares Core SP |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |