Correlation Between Global X and ZEGA Buy

Can any of the company-specific risk be diversified away by investing in both Global X and ZEGA Buy 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 ZEGA Buy 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 ZEGA Buy and, you can compare the effects of market volatilities on Global X and ZEGA Buy 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 ZEGA Buy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and ZEGA Buy.

Diversification Opportunities for Global X and ZEGA Buy

0.74

Correlation Coefficient

Global X  ZEGA Buy

Poor diversification

The 3 months correlation between Global and ZEGA is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Global X SP and ZEGA Buy and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZEGA Buy 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 ZEGA Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZEGA Buy has no effect on the direction of Global X i.e., Global X and ZEGA Buy go up and down completely randomly.

Pair Corralation between Global X and ZEGA Buy

Given the investment horizon of 90 days Global X is expected to generate 1.48 times less return on investment than ZEGA Buy. But when comparing it to its historical volatility, Global X SP is 1.59 times less risky than ZEGA Buy. It trades about 0.24 of its potential returns per unit of risk. ZEGA Buy and is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,964  in ZEGA Buy and on September 5, 2024 and sell it today you would earn a total of  175.50  from holding ZEGA Buy and or generate 8.94% return on investment over 90 days.

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

Global X SP  vs.  ZEGA Buy and

Global X SP

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X SP are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Global X is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

ZEGA Buy

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ZEGA Buy and are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting fundamental indicators, ZEGA Buy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Global X and ZEGA Buy

The main advantage of trading using opposite Global X and ZEGA Buy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, ZEGA Buy 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 ZEGA Buy will offset losses from the drop in ZEGA Buy's long position.

The idea behind Global X SP and ZEGA Buy and 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.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.