Correlation Between Global X and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Global X and Alibaba Group 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 Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Funds and Alibaba Group Holding, you can compare the effects of market volatilities on Global X and Alibaba Group 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 Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Alibaba Group.
Diversification Opportunities for Global X and Alibaba Group
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Global and Alibaba is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds and Alibaba Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alibaba Group Holding 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 Funds are associated (or correlated) with Alibaba Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alibaba Group Holding has no effect on the direction of Global X i.e., Global X and Alibaba Group go up and down completely randomly.
Pair Corralation between Global X and Alibaba Group
Considering the 90-day investment horizon Global X Funds is expected to generate 0.29 times more return on investment than Alibaba Group. However, Global X Funds is 3.43 times less risky than Alibaba Group. It trades about 0.02 of its potential returns per unit of risk. Alibaba Group Holding is currently generating about 0.0 per unit of risk. If you would invest 2,493 in Global X Funds on January 26, 2024 and sell it today you would earn a total of 67.00 from holding Global X Funds or generate 2.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 48.38% |
| Values | Daily Returns |
Global X Funds vs. Alibaba Group Holding
Performance |
| Timeline |
| Global X Funds |
| Alibaba Group Holding |
Global X and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Alibaba Group
The main advantage of trading using opposite Global X and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Alibaba Group 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 Alibaba Group will offset losses from the drop in Alibaba Group's long position.| Global X vs. Desktop Metal | Global X vs. Fabrinet | Global X vs. Kimball Electronics | Global X vs. Knowles Cor |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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