Correlation Between RBC Short and Global X

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

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

Diversification Opportunities for RBC Short and Global X

0.36

Correlation Coefficient

RBC Short  Global X

Weak diversification

The 3 months correlation between RBC and Global is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding RBC Short Term and Global X SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X SP and RBC Short 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 RBC Short Term 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 SP has no effect on the direction of RBC Short i.e., RBC Short and Global X go up and down completely randomly.

Pair Corralation between RBC Short and Global X

Assuming the 90 days trading horizon RBC Short is expected to generate 10.16 times less return on investment than Global X. But when comparing it to its historical volatility, RBC Short Term is 2.54 times less risky than Global X. It trades about 0.02 of its potential returns per unit of risk. Global X SP is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  8,067  in Global X SP on September 13, 2025 and sell it today you would earn a total of  321.00  from holding Global X SP or generate 3.98% return on investment over 90 days.

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

RBC Short Term  vs.  Global X SP

RBC Short Term

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Short Term are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, RBC Short is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Global X SP

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Global X SP are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical indicators, Global X is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with RBC Short and Global X

The main advantage of trading using opposite RBC Short and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Short 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 RBC Short Term and Global X SP 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.