Correlation Between Global X and IShares SP
Can any of the company-specific risk be diversified away by investing in both Global X and IShares SP 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 SP 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 SP Mid Cap, you can compare the effects of market volatilities on Global X and IShares SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and IShares SP.
Diversification Opportunities for Global X and IShares SP
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and IShares is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Global X Thematic and iShares SP Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SP Mid 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 SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP Mid has no effect on the direction of Global X i.e., Global X and IShares SP go up and down completely randomly.
Pair Corralation between Global X and IShares SP
Given the investment horizon of 90 days Global X is expected to generate 2.85 times less return on investment than IShares SP. In addition to that, Global X is 1.05 times more volatile than iShares SP Mid Cap. It trades about 0.12 of its total potential returns per unit of risk. iShares SP Mid Cap is currently generating about 0.35 per unit of volatility. If you would invest 9,066 in iShares SP Mid Cap on September 1, 2024 and sell it today you would earn a total of 810.00 from holding iShares SP Mid Cap or generate 8.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Thematic vs. iShares SP Mid Cap
Performance |
| Timeline |
| Global X Thematic |
| iShares SP Mid |
Global X and IShares SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and IShares SP
The main advantage of trading using opposite Global X and IShares SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, IShares SP 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 SP will offset losses from the drop in IShares SP's long position.The idea behind Global X Thematic and iShares SP Mid Cap 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.| IShares SP vs. JPMorgan Fundamental Data | IShares SP vs. Vanguard Mid Cap Index | IShares SP vs. SPDR SP 400 | IShares SP vs. SPDR SP 400 |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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