Correlation Between Global X and IShares Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Global X and IShares Pharmaceuticals 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 Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Thematic and iShares Pharmaceuticals ETF, you can compare the effects of market volatilities on Global X and IShares Pharmaceuticals 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 Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and IShares Pharmaceuticals.
Diversification Opportunities for Global X and IShares Pharmaceuticals
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and IShares is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Global X Thematic and iShares Pharmaceuticals ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Pharmaceuticals 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 Thematic are associated (or correlated) with IShares Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Pharmaceuticals has no effect on the direction of Global X i.e., Global X and IShares Pharmaceuticals go up and down completely randomly.
Pair Corralation between Global X and IShares Pharmaceuticals
Given the investment horizon of 90 days Global X Thematic is expected to generate 1.51 times more return on investment than IShares Pharmaceuticals. However, Global X is 1.51 times more volatile than iShares Pharmaceuticals ETF. It trades about -0.03 of its potential returns per unit of risk. iShares Pharmaceuticals ETF is currently generating about -0.07 per unit of risk. If you would invest 2,542 in Global X Thematic on August 29, 2024 and sell it today you would lose (51.00) from holding Global X Thematic or give up 2.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Thematic vs. iShares Pharmaceuticals ETF
Performance |
| Timeline |
| Global X Thematic |
| iShares Pharmaceuticals |
Global X and IShares Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and IShares Pharmaceuticals
The main advantage of trading using opposite Global X and IShares Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, IShares Pharmaceuticals 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 Pharmaceuticals will offset losses from the drop in IShares Pharmaceuticals' long position.| Global X vs. Global X Conscious | Global X vs. Global X SP | Global X vs. Global X Millennials | Global X vs. Global X MSCI |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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