Correlation Between Global X and IShares Canadian
Can any of the company-specific risk be diversified away by investing in both Global X and IShares Canadian 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 Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Big and iShares Canadian Select, you can compare the effects of market volatilities on Global X and IShares Canadian 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 Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and IShares Canadian.
Diversification Opportunities for Global X and IShares Canadian
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and IShares is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Global X Big and iShares Canadian Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Canadian Select 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 Big are associated (or correlated) with IShares Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Canadian Select has no effect on the direction of Global X i.e., Global X and IShares Canadian go up and down completely randomly.
Pair Corralation between Global X and IShares Canadian
Assuming the 90 days trading horizon Global X Big is expected to generate 4.35 times more return on investment than IShares Canadian. However, Global X is 4.35 times more volatile than iShares Canadian Select. It trades about 0.1 of its potential returns per unit of risk. iShares Canadian Select is currently generating about 0.19 per unit of risk. If you would invest 1,943 in Global X Big on September 1, 2024 and sell it today you would earn a total of 1,427 from holding Global X Big or generate 73.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.63% |
| Values | Daily Returns |
Global X Big vs. iShares Canadian Select
Performance |
| Timeline |
| Global X Big |
| iShares Canadian Select |
Global X and IShares Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and IShares Canadian
The main advantage of trading using opposite Global X and IShares Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, IShares Canadian 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 Canadian will offset losses from the drop in IShares Canadian's long position.| Global X vs. Blockchain Technologies ETF | Global X vs. Global X Robotics | Global X vs. Evolve Automobile Innovation | Global X vs. Evolve Innovation Index |
| IShares Canadian vs. Vanguard FTSE Canadian | IShares Canadian vs. Vanguard SP 500 | IShares Canadian vs. iShares Core SPTSX |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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