Correlation Between IShares 1 and Global X
Can any of the company-specific risk be diversified away by investing in both IShares 1 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 1 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 1 5 Year and Global X Active, you can compare the effects of market volatilities on IShares 1 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 1 with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 1 and Global X.
Diversification Opportunities for IShares 1 and Global X
Weak diversification
The 3 months correlation between IShares and Global is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding iShares 1 5 Year and Global X Active in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Active and IShares 1 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 1 5 Year 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 Active has no effect on the direction of IShares 1 i.e., IShares 1 and Global X go up and down completely randomly.
Pair Corralation between IShares 1 and Global X
Assuming the 90 days trading horizon IShares 1 is expected to generate 3.29 times less return on investment than Global X. But when comparing it to its historical volatility, iShares 1 5 Year is 1.94 times less risky than Global X. It trades about 0.24 of its potential returns per unit of risk. Global X Active is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 915.00 in Global X Active on September 13, 2024 and sell it today you would earn a total of 30.00 from holding Global X Active or generate 3.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares 1 5 Year vs. Global X Active
Performance |
| Timeline |
| iShares 1 5 |
| Global X Active |
IShares 1 and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares 1 and Global X
The main advantage of trading using opposite IShares 1 and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 1 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 1 vs. iShares Canadian Universe | IShares 1 vs. iShares Canadian Real | IShares 1 vs. iShares Core Canadian | IShares 1 vs. iShares Core Canadian |
| Global X vs. iShares 1 5 Year | Global X vs. iShares 1 5 Year | Global X vs. iShares Core Canadian | Global X vs. iShares Global Monthly |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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