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
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Global and IShares is 1.0. 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 is expected to generate 1.01 times less return on investment than IShares Gold. In addition to that, Global X is 1.0 times more volatile than iShares Gold Bullion. It trades about 0.09 of its total potential returns per unit of risk. iShares Gold Bullion is currently generating about 0.09 per unit of volatility. If you would invest 1,869 in iShares Gold Bullion on September 1, 2024 and sell it today you would earn a total of 225.00 from holding iShares Gold Bullion or generate 12.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| 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.The idea behind Global X Gold and iShares Gold Bullion 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 Gold vs. iShares Gold Bullion | IShares Gold vs. iShares Silver Bullion | IShares Gold vs. iShares SPTSX Global | IShares Gold vs. Global X Gold |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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