Correlation Between IShares Self and Global X
Can any of the company-specific risk be diversified away by investing in both IShares Self 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 Self 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 Self Driving EV and Global X Lithium, you can compare the effects of market volatilities on IShares Self 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 Self with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Self and Global X.
Diversification Opportunities for IShares Self and Global X
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Global is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding iShares Self Driving EV and Global X Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Lithium and IShares Self 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 Self Driving EV 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 Lithium has no effect on the direction of IShares Self i.e., IShares Self and Global X go up and down completely randomly.
Pair Corralation between IShares Self and Global X
Given the investment horizon of 90 days iShares Self Driving EV is expected to generate 0.89 times more return on investment than Global X. However, iShares Self Driving EV is 1.13 times less risky than Global X. It trades about -0.03 of its potential returns per unit of risk. Global X Lithium is currently generating about -0.04 per unit of risk. If you would invest 3,763 in iShares Self Driving EV on August 31, 2024 and sell it today you would lose (814.00) from holding iShares Self Driving EV or give up 21.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Self Driving EV vs. Global X Lithium
Performance |
| Timeline |
| iShares Self Driving |
| Global X Lithium |
IShares Self and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Self and Global X
The main advantage of trading using opposite IShares Self and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Self 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 Self vs. Industrial Select Sector | IShares Self vs. Driven Brands Holdings | IShares Self vs. Vanguard Industrials Index | IShares Self vs. Invesco Aerospace Defense |
| Global X vs. Invesco Solar ETF | Global X vs. Albemarle Corp | Global X vs. Lithium Americas Corp | Global X vs. iShares Global Clean |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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