Correlation Between IShares Trust and Global X
Can any of the company-specific risk be diversified away by investing in both IShares Trust 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 Trust 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 Trust and Global X SP, you can compare the effects of market volatilities on IShares Trust 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 Trust with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and Global X.
Diversification Opportunities for IShares Trust and Global X
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Global is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Global X SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X SP and IShares Trust 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 Trust 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 SP has no effect on the direction of IShares Trust i.e., IShares Trust and Global X go up and down completely randomly.
Pair Corralation between IShares Trust and Global X
Given the investment horizon of 90 days IShares Trust is expected to generate 2.13 times less return on investment than Global X. In addition to that, IShares Trust is 1.66 times more volatile than Global X SP. It trades about 0.03 of its total potential returns per unit of risk. Global X SP is currently generating about 0.11 per unit of volatility. If you would invest 2,294 in Global X SP on August 30, 2024 and sell it today you would earn a total of 1,064 from holding Global X SP or generate 46.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. Global X SP
Performance |
| Timeline |
| iShares Trust |
| Global X SP |
IShares Trust and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and Global X
The main advantage of trading using opposite IShares Trust and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust 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 Trust vs. First Trust Exchange Traded | IShares Trust vs. Ultimus Managers Trust | IShares Trust vs. Horizon Kinetics Medical | IShares Trust vs. Harbor Health Care |
| Global X vs. Freedom Day Dividend | Global X vs. Franklin Templeton ETF | Global X vs. iShares MSCI China | Global X vs. Tidal Trust II |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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