Correlation Between Global X and IShares Gold
Can any of the company-specific risk be diversified away by investing in both Global X and IShares Gold 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 Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Gold and iShares Gold Bullion, you can compare the effects of market volatilities on Global X and IShares Gold 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 Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and IShares Gold.
Diversification Opportunities for Global X and IShares Gold
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Global and IShares is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Global X Gold and iShares Gold Bullion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Gold Bullion 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 Gold are associated (or correlated) with IShares Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Gold Bullion has no effect on the direction of Global X i.e., Global X and IShares Gold go up and down completely randomly.
Pair Corralation between Global X and IShares Gold
Assuming the 90 days trading horizon Global X Gold is expected to under-perform the IShares Gold. In addition to that, Global X is 1.15 times more volatile than iShares Gold Bullion. It trades about -0.19 of its total potential returns per unit of risk. iShares Gold Bullion is currently generating about -0.16 per unit of volatility. If you would invest 3,269 in iShares Gold Bullion on August 31, 2024 and sell it today you would lose (138.00) from holding iShares Gold Bullion or give up 4.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Global X Gold vs. iShares Gold Bullion
Performance |
| Timeline |
| Global X Gold |
| iShares Gold Bullion |
Global X and IShares Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and IShares Gold
The main advantage of trading using opposite Global X and IShares Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, IShares Gold 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 Gold will offset losses from the drop in IShares Gold's long position.| Global X vs. Global X Equal | Global X vs. Global X Enhanced | Global X vs. Global X Gold | Global X vs. Global X Canadian |
| IShares Gold vs. iShares Convertible Bond | IShares Gold vs. iShares SP Mid Cap | IShares Gold vs. iShares Edge MSCI | IShares Gold vs. iShares Flexible Monthly |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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