Correlation Between IShares Environmental and Global X
Can any of the company-specific risk be diversified away by investing in both IShares Environmental 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 Environmental 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 Environmental Infrastructure and Global X Infrastructure, you can compare the effects of market volatilities on IShares Environmental 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 Environmental with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Environmental and Global X.
Diversification Opportunities for IShares Environmental and Global X
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and Global is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding iShares Environmental Infrastr and Global X Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Infrastructure and IShares Environmental 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 Environmental Infrastructure 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 Infrastructure has no effect on the direction of IShares Environmental i.e., IShares Environmental and Global X go up and down completely randomly.
Pair Corralation between IShares Environmental and Global X
Given the investment horizon of 90 days IShares Environmental is expected to generate 2.15 times less return on investment than Global X. But when comparing it to its historical volatility, iShares Environmental Infrastructure is 1.33 times less risky than Global X. It trades about 0.06 of its potential returns per unit of risk. Global X Infrastructure is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,691 in Global X Infrastructure on August 30, 2024 and sell it today you would earn a total of 1,868 from holding Global X Infrastructure or generate 69.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Environmental Infrastr vs. Global X Infrastructure
Performance |
| Timeline |
| iShares Environmental |
| Global X Infrastructure |
IShares Environmental and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Environmental and Global X
The main advantage of trading using opposite IShares Environmental and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Environmental 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 Environmental vs. Freedom Day Dividend | IShares Environmental vs. Franklin Templeton ETF | IShares Environmental vs. iShares MSCI China | IShares Environmental vs. Tidal Trust II |
| Global X vs. iShares Infrastructure ETF | Global X vs. Global X Cloud | Global X vs. Global X Cybersecurity | Global X vs. Invesco Dynamic Leisure |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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