Correlation Between Global X and IShares JP
Can any of the company-specific risk be diversified away by investing in both Global X and IShares JP 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 JP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Emerging and iShares JP Morgan, you can compare the effects of market volatilities on Global X and IShares JP 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 JP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and IShares JP.
Diversification Opportunities for Global X and IShares JP
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Global and IShares is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Global X Emerging and iShares JP Morgan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares JP Morgan 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 Emerging are associated (or correlated) with IShares JP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares JP Morgan has no effect on the direction of Global X i.e., Global X and IShares JP go up and down completely randomly.
Pair Corralation between Global X and IShares JP
Given the investment horizon of 90 days Global X Emerging is expected to generate 0.95 times more return on investment than IShares JP. However, Global X Emerging is 1.06 times less risky than IShares JP. It trades about 0.07 of its potential returns per unit of risk. iShares JP Morgan is currently generating about 0.06 per unit of risk. If you would invest 1,955 in Global X Emerging on August 26, 2024 and sell it today you would earn a total of 348.00 from holding Global X Emerging or generate 17.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Emerging vs. iShares JP Morgan
Performance |
| Timeline |
| Global X Emerging |
| iShares JP Morgan |
Global X and IShares JP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and IShares JP
The main advantage of trading using opposite Global X and IShares JP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, IShares JP 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 JP will offset losses from the drop in IShares JP's long position.| Global X vs. iShares JP Morgan | Global X vs. Invesco Emerging Markets | Global X vs. iShares JP Morgan | Global X vs. iShares JP Morgan |
| IShares JP vs. iShares iBoxx Investment | IShares JP vs. iShares iBoxx High | IShares JP vs. iShares National Muni | IShares JP vs. Invesco Emerging Markets |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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