Correlation Between Purpose Diversified and Global X

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

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

Diversification Opportunities for Purpose Diversified and Global X

0.86

Correlation Coefficient

Purpose Diversified  Global X

Very poor diversification

The 3 months correlation between Purpose and Global is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Purpose Diversified Real and Global X Equal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Equal and Purpose Diversified 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 Purpose Diversified Real 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 Equal has no effect on the direction of Purpose Diversified i.e., Purpose Diversified and Global X go up and down completely randomly.

Pair Corralation between Purpose Diversified and Global X

Assuming the 90 days trading horizon Purpose Diversified is expected to generate 1.68 times less return on investment than Global X. But when comparing it to its historical volatility, Purpose Diversified Real is 1.08 times less risky than Global X. It trades about 0.15 of its potential returns per unit of risk. Global X Equal is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  2,579  in Global X Equal on April 22, 2025 and sell it today you would earn a total of  289.00  from holding Global X Equal or generate 11.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Purpose Diversified Real  vs.  Global X Equal

Purpose Diversified Real

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Purpose Diversified Real are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Purpose Diversified may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Global X Equal

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Equal are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Purpose Diversified and Global X

The main advantage of trading using opposite Purpose Diversified and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Purpose Diversified 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 Purpose Diversified Real and Global X Equal 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.