Correlation Between MicroSectorsTM Oil and Global X
Can any of the company-specific risk be diversified away by investing in both MicroSectorsTM Oil 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 MicroSectorsTM Oil and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MicroSectorsTM Oil Gas and Global X, you can compare the effects of market volatilities on MicroSectorsTM Oil 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 MicroSectorsTM Oil with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectorsTM Oil and Global X.
Diversification Opportunities for MicroSectorsTM Oil and Global X
-0.95 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between MicroSectorsTM and Global is -0.95. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectorsTM Oil Gas and Global X in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X and MicroSectorsTM Oil 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 MicroSectorsTM Oil Gas 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 has no effect on the direction of MicroSectorsTM Oil i.e., MicroSectorsTM Oil and Global X go up and down completely randomly.
Pair Corralation between MicroSectorsTM Oil and Global X
Given the investment horizon of 90 days MicroSectorsTM Oil Gas is expected to under-perform the Global X. In addition to that, MicroSectorsTM Oil is 3.81 times more volatile than Global X. It trades about -0.04 of its total potential returns per unit of risk. Global X is currently generating about 0.22 per unit of volatility. If you would invest 2,515 in Global X on January 20, 2024 and sell it today you would earn a total of 324.00 from holding Global X or generate 12.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 54.84% |
| Values | Daily Returns |
MicroSectorsTM Oil Gas vs. Global X
Performance |
| Timeline |
| MicroSectorsTM Oil Gas |
| Global X |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
MicroSectorsTM Oil and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectorsTM Oil and Global X
The main advantage of trading using opposite MicroSectorsTM Oil and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectorsTM Oil 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.| MicroSectorsTM Oil vs. ProShares Ultra SP500 | MicroSectorsTM Oil vs. HUMANA INC | MicroSectorsTM Oil vs. Aquagold International | MicroSectorsTM Oil vs. Thrivent High Yield |
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 Stocks Directory module to find actively traded stocks across global markets.
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