Correlation Between Russell Investments and Global X

Can any of the company-specific risk be diversified away by investing in both Russell 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 Russell 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 Russell Investments Australian and Global X Hydrogen, you can compare the effects of market volatilities on Russell 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 Russell Investments with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Russell Investments and Global X.

Diversification Opportunities for Russell Investments and Global X

0.75

Correlation Coefficient

Russell Investments  Global X

Poor diversification

The 3 months correlation between Russell and Global is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Russell Investments Australian and Global X Hydrogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Hydrogen and Russell 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 Russell Investments Australian 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 Hydrogen has no effect on the direction of Russell Investments i.e., Russell Investments and Global X go up and down completely randomly.

Pair Corralation between Russell Investments and Global X

Assuming the 90 days trading horizon Russell Investments Australian is expected to generate 0.34 times more return on investment than Global X. However, Russell Investments Australian is 2.96 times less risky than Global X. It trades about 0.12 of its potential returns per unit of risk. Global X Hydrogen is currently generating about -0.02 per unit of risk. If you would invest  2,705  in Russell Investments Australian on September 5, 2024 and sell it today you would earn a total of  333.00  from holding Russell Investments Australian or generate 12.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.22%
Values	Daily Returns

Russell Investments Australian  vs.  Global X Hydrogen

Russell Investments

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Russell Investments Australian are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Russell Investments is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Global X Hydrogen

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Hydrogen are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Global X unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Russell Investments and Global X

The main advantage of trading using opposite Russell Investments and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Russell 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 Russell Investments Australian and Global X Hydrogen 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.