Correlation Between IShares ESG and Global X
Can any of the company-specific risk be diversified away by investing in both IShares ESG 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 ESG 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 ESG Aware and Global X Adaptive, you can compare the effects of market volatilities on IShares ESG 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 ESG with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and Global X.
Diversification Opportunities for IShares ESG and Global X
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and Global is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Aware and Global X Adaptive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Adaptive and IShares ESG 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 ESG Aware 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 Adaptive has no effect on the direction of IShares ESG i.e., IShares ESG and Global X go up and down completely randomly.
Pair Corralation between IShares ESG and Global X
Given the investment horizon of 90 days iShares ESG Aware is expected to generate 1.12 times more return on investment than Global X. However, IShares ESG is 1.12 times more volatile than Global X Adaptive. It trades about 0.11 of its potential returns per unit of risk. Global X Adaptive is currently generating about 0.09 per unit of risk. If you would invest 8,483 in iShares ESG Aware on August 30, 2024 and sell it today you would earn a total of 4,701 from holding iShares ESG Aware or generate 55.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares ESG Aware vs. Global X Adaptive
Performance |
| Timeline |
| iShares ESG Aware |
| Global X Adaptive |
IShares ESG and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares ESG and Global X
The main advantage of trading using opposite IShares ESG and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG 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 ESG vs. JPMorgan BetaBuilders International | IShares ESG vs. JPMorgan Core Plus | IShares ESG vs. JPMorgan BetaBuilders Canada | IShares ESG vs. JPMorgan Emerging Markets |
| Global X vs. JPMorgan BetaBuilders International | Global X vs. JPMorgan Core Plus | Global X vs. JPMorgan BetaBuilders Canada | Global X vs. JPMorgan 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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