Correlation Between IShares Asia and Global X
Can any of the company-specific risk be diversified away by investing in both IShares Asia and Global X 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 IShares Asia and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Asia 50 and Global X Semiconductor, you can compare the effects of market volatilities on IShares Asia and Global X 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 IShares Asia with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Asia and Global X.
Diversification Opportunities for IShares Asia and Global X
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Global is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding iShares Asia 50 and Global X Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Semiconductor and IShares Asia 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 iShares Asia 50 are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Semiconductor has no effect on the direction of IShares Asia i.e., IShares Asia and Global X go up and down completely randomly.
Pair Corralation between IShares Asia and Global X
Assuming the 90 days trading horizon iShares Asia 50 is expected to under-perform the Global X. But the etf apears to be less risky and, when comparing its historical volatility, iShares Asia 50 is 1.94 times less risky than Global X. The etf trades about -0.28 of its potential returns per unit of risk. The Global X Semiconductor is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 1,694 in Global X Semiconductor on August 29, 2024 and sell it today you would lose (56.00) from holding Global X Semiconductor or give up 3.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Asia 50 vs. Global X Semiconductor
Performance |
| Timeline |
| iShares Asia 50 |
| Global X Semiconductor |
IShares Asia and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Asia and Global X
The main advantage of trading using opposite IShares Asia and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Asia position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| IShares Asia vs. iShares MSCI Emerging | IShares Asia vs. iShares Global Aggregate | IShares Asia vs. iShares CoreSP MidCap | IShares Asia vs. iShares SP 500 |
| Global X vs. BetaShares Geared Australian | Global X vs. BetaShares Global Robotics | Global X vs. iShares China LargeCap | Global X vs. Russell Australian Government |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |