Correlation Between IShares JP and Global X
Can any of the company-specific risk be diversified away by investing in both IShares JP 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 IShares JP and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares JP Morgan and Global X Emerging, you can compare the effects of market volatilities on IShares JP 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 IShares JP with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares JP and Global X.
Diversification Opportunities for IShares JP and Global X
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Global is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding iShares JP Morgan and Global X Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Emerging and IShares JP 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 iShares JP Morgan 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 Emerging has no effect on the direction of IShares JP i.e., IShares JP and Global X go up and down completely randomly.
Pair Corralation between IShares JP and Global X
Given the investment horizon of 90 days IShares JP is expected to generate 1.24 times less return on investment than Global X. But when comparing it to its historical volatility, iShares JP Morgan is 1.97 times less risky than Global X. It trades about 0.16 of its potential returns per unit of risk. Global X Emerging is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,194 in Global X Emerging on August 29, 2024 and sell it today you would earn a total of 119.00 from holding Global X Emerging or generate 5.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares JP Morgan vs. Global X Emerging
Performance |
| Timeline |
| iShares JP Morgan |
| Global X Emerging |
IShares JP and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares JP and Global X
The main advantage of trading using opposite IShares JP and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares JP 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.| IShares JP vs. VanEck Emerging Markets | IShares JP vs. iShares Intl High | IShares JP vs. iShares International High |
| Global X vs. Global X Variable | Global X vs. Global X Alternative | Global X vs. Global X SP | Global X vs. Global X MSCI |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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