Correlation Between Global X and IShares ESG
Can any of the company-specific risk be diversified away by investing in both Global X and IShares ESG 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 IShares ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X MSCI and iShares ESG Advanced, you can compare the effects of market volatilities on Global X and IShares ESG 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 IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and IShares ESG.
Diversification Opportunities for Global X and IShares ESG
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Global and IShares is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Global X MSCI and iShares ESG Advanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Advanced 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 MSCI are associated (or correlated) with IShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG Advanced has no effect on the direction of Global X i.e., Global X and IShares ESG go up and down completely randomly.
Pair Corralation between Global X and IShares ESG
Given the investment horizon of 90 days Global X MSCI is expected to generate 0.84 times more return on investment than IShares ESG. However, Global X MSCI is 1.18 times less risky than IShares ESG. It trades about 0.06 of its potential returns per unit of risk. iShares ESG Advanced is currently generating about 0.05 per unit of risk. If you would invest 1,267 in Global X MSCI on September 14, 2024 and sell it today you would earn a total of 179.00 from holding Global X MSCI or generate 14.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X MSCI vs. iShares ESG Advanced
Performance |
| Timeline |
| Global X MSCI |
| iShares ESG Advanced |
Global X and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and IShares ESG
The main advantage of trading using opposite Global X and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, IShares ESG 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 IShares ESG will offset losses from the drop in IShares ESG's long position.| Global X vs. Global X MSCI | Global X vs. Global X Alternative | Global X vs. First Trust Intl | Global X vs. iShares AsiaPacific Dividend |
| IShares ESG vs. Global X MSCI | IShares ESG vs. Global X Alternative | IShares ESG vs. iShares Emerging Markets | IShares ESG vs. Global X SuperDividend |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |