Correlation Between IShares MSCI and Global X
Can any of the company-specific risk be diversified away by investing in both IShares MSCI 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 MSCI 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 MSCI United and Global X MSCI, you can compare the effects of market volatilities on IShares MSCI 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 MSCI with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Global X.
Diversification Opportunities for IShares MSCI and Global X
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Global is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI United and Global X MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X MSCI and IShares MSCI 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 MSCI United 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 MSCI has no effect on the direction of IShares MSCI i.e., IShares MSCI and Global X go up and down completely randomly.
Pair Corralation between IShares MSCI and Global X
Considering the 90-day investment horizon iShares MSCI United is expected to under-perform the Global X. But the etf apears to be less risky and, when comparing its historical volatility, iShares MSCI United is 1.09 times less risky than Global X. The etf trades about -0.21 of its potential returns per unit of risk. The Global X MSCI is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 3,976 in Global X MSCI on August 28, 2024 and sell it today you would lose (106.00) from holding Global X MSCI or give up 2.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI United vs. Global X MSCI
Performance |
| Timeline |
| iShares MSCI United |
| Global X MSCI |
IShares MSCI and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and Global X
The main advantage of trading using opposite IShares MSCI and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI 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 MSCI vs. WisdomTree Europe Hedged | IShares MSCI vs. Global X MSCI | IShares MSCI vs. Vanguard Total Bond | IShares MSCI vs. iShares MSCI Germany |
| Global X vs. iShares MSCI Italy | Global X vs. Global X MSCI | Global X vs. iShares MSCI Spain | Global X vs. iShares MSCI Turkey |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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