Correlation Between Global X and IShares 1
Can any of the company-specific risk be diversified away by investing in both Global X and IShares 1 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 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Canadian and iShares 1 10Yr Laddered, you can compare the effects of market volatilities on Global X and IShares 1 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 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and IShares 1.
Diversification Opportunities for Global X and IShares 1
Almost no diversification
The 3 months correlation between Global and IShares is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Global X Canadian and iShares 1 10Yr Laddered in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 1 10Yr 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 Canadian are associated (or correlated) with IShares 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares 1 10Yr has no effect on the direction of Global X i.e., Global X and IShares 1 go up and down completely randomly.
Pair Corralation between Global X and IShares 1
Assuming the 90 days trading horizon Global X Canadian is expected to generate 1.51 times more return on investment than IShares 1. However, Global X is 1.51 times more volatile than iShares 1 10Yr Laddered. It trades about 0.09 of its potential returns per unit of risk. iShares 1 10Yr Laddered is currently generating about 0.11 per unit of risk. If you would invest 4,352 in Global X Canadian on August 25, 2024 and sell it today you would earn a total of 457.00 from holding Global X Canadian or generate 10.5% 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 Canadian vs. iShares 1 10Yr Laddered
Performance |
| Timeline |
| Global X Canadian |
| iShares 1 10Yr |
Global X and IShares 1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and IShares 1
The main advantage of trading using opposite Global X and IShares 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, IShares 1 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 1 will offset losses from the drop in IShares 1's long position.| Global X vs. Mackenzie Core Plus | Global X vs. Mackenzie Unconstrained Bond | Global X vs. Mackenzie Floating Rate | Global X vs. Mackenzie Canadian Aggregate |
| IShares 1 vs. Mackenzie Core Plus | IShares 1 vs. Mackenzie Unconstrained Bond | IShares 1 vs. Mackenzie Floating Rate | IShares 1 vs. Mackenzie Canadian Aggregate |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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