Correlation Between Global X and IShares Trust
Can any of the company-specific risk be diversified away by investing in both Global X and IShares Trust 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 Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Funds and iShares Trust , you can compare the effects of market volatilities on Global X and IShares Trust 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 Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and IShares Trust.
Diversification Opportunities for Global X and IShares Trust
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Global and IShares is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust 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 Funds are associated (or correlated) with IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of Global X i.e., Global X and IShares Trust go up and down completely randomly.
Pair Corralation between Global X and IShares Trust
Given the investment horizon of 90 days Global X is expected to generate 1.3 times less return on investment than IShares Trust. But when comparing it to its historical volatility, Global X Funds is 1.3 times less risky than IShares Trust. It trades about 0.12 of its potential returns per unit of risk. iShares Trust is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,221 in iShares Trust on August 26, 2024 and sell it today you would earn a total of 1,143 from holding iShares Trust or generate 35.49% 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 Funds vs. iShares Trust
Performance |
| Timeline |
| Global X Funds |
| iShares Trust |
Global X and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and IShares Trust
The main advantage of trading using opposite Global X and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, IShares Trust 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 Trust will offset losses from the drop in IShares Trust's long position.| Global X vs. Cambria Micro And | Global X vs. Invesco Actively Managed | Global X vs. iShares Trust | Global X vs. EMCS |
| IShares Trust vs. Invesco Dynamic Large | IShares Trust vs. Perella Weinberg Partners | IShares Trust vs. HUMANA INC | IShares Trust vs. Aquagold International |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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