Correlation Between GP Investments and Global X

Can any of the company-specific risk be diversified away by investing in both GP Investments 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 GP Investments and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GP Investments and Global X Funds, you can compare the effects of market volatilities on GP Investments 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 GP Investments with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of GP Investments and Global X.

Diversification Opportunities for GP Investments and Global X

-0.46

Correlation Coefficient

GP Investments  Global X

Very good diversification

The 3 months correlation between GPIV33 and Global is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding GP Investments and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds and GP Investments 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 GP Investments 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 Funds has no effect on the direction of GP Investments i.e., GP Investments and Global X go up and down completely randomly.

Pair Corralation between GP Investments and Global X

Assuming the 90 days trading horizon GP Investments is expected to generate 1.15 times less return on investment than Global X. In addition to that, GP Investments is 2.82 times more volatile than Global X Funds. It trades about 0.02 of its total potential returns per unit of risk. Global X Funds is currently generating about 0.08 per unit of volatility. If you would invest  4,360  in Global X Funds on August 23, 2024 and sell it today you would earn a total of  290.00  from holding Global X Funds or generate 6.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

GP Investments  vs.  Global X Funds

GP Investments

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GP Investments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, GP Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Global X Funds

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with GP Investments and Global X

The main advantage of trading using opposite GP Investments and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GP Investments 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.

The idea behind GP Investments and Global X Funds pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.