Correlation Between Global X and IShares Core

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Can any of the company-specific risk be diversified away by investing in both Global X and IShares Core 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 Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Canadian and iShares Core Canadian, you can compare the effects of market volatilities on Global X and IShares Core 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 Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and IShares Core.

Diversification Opportunities for Global X and IShares Core

-0.8
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Global and IShares is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Global X Canadian and iShares Core Canadian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Canadian 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 Canadian are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core Canadian has no effect on the direction of Global X i.e., Global X and IShares Core go up and down completely randomly.

Pair Corralation between Global X and IShares Core

Assuming the 90 days trading horizon Global X Canadian is expected to generate 1.06 times more return on investment than IShares Core. However, Global X is 1.06 times more volatile than iShares Core Canadian. It trades about 0.1 of its potential returns per unit of risk. iShares Core Canadian is currently generating about 0.01 per unit of risk. If you would invest  941.00  in Global X Canadian on August 29, 2024 and sell it today you would earn a total of  196.00  from holding Global X Canadian or generate 20.83% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy99.52%
ValuesDaily Returns

Global X Canadian  vs.  iShares Core Canadian

 Performance 
       Timeline  
Global X Canadian 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Global X Canadian are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Global X is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
iShares Core Canadian 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days iShares Core Canadian has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, IShares Core is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Global X and IShares Core Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Global X and IShares Core

The main advantage of trading using opposite Global X and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, IShares Core 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 Core will offset losses from the drop in IShares Core's long position.
The idea behind Global X Canadian and iShares Core Canadian pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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