Correlation Between Global X and IShares Global
Can any of the company-specific risk be diversified away by investing in both Global X and IShares Global 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 Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Active and iShares Global Monthly, you can compare the effects of market volatilities on Global X and IShares Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and IShares Global.
Diversification Opportunities for Global X and IShares Global
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and IShares is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Global X Active and iShares Global Monthly in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Monthly 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 Active are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Monthly has no effect on the direction of Global X i.e., Global X and IShares Global go up and down completely randomly.
Pair Corralation between Global X and IShares Global
Assuming the 90 days trading horizon Global X Active is expected to generate 0.97 times more return on investment than IShares Global. However, Global X Active is 1.03 times less risky than IShares Global. It trades about 0.15 of its potential returns per unit of risk. iShares Global Monthly is currently generating about 0.11 per unit of risk. If you would invest 3,065 in Global X Active on August 25, 2024 and sell it today you would earn a total of 705.00 from holding Global X Active or generate 23.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Active vs. iShares Global Monthly
Performance |
| Timeline |
| Global X Active |
| iShares Global Monthly |
Global X and IShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and IShares Global
The main advantage of trading using opposite Global X and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, IShares Global 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 Global will offset losses from the drop in IShares Global's long position.| Global X vs. Global Healthcare Income | Global X vs. Tech Leaders Income | Global X vs. Brompton North American | Global X vs. Brompton European Dividend |
| IShares Global vs. iShares Global Infrastructure | IShares Global vs. iShares Global Real | IShares Global vs. iShares Dividend Growers | IShares Global vs. iShares 1 5 Year |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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