Correlation Between IShares Utilities and Global X
Can any of the company-specific risk be diversified away by investing in both IShares Utilities 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 Utilities 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 Utilities ETF and Global X Renewable, you can compare the effects of market volatilities on IShares Utilities 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 Utilities with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Utilities and Global X.
Diversification Opportunities for IShares Utilities and Global X
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IShares and Global is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding iShares Utilities ETF and Global X Renewable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Renewable and IShares Utilities 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 Utilities ETF 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 Renewable has no effect on the direction of IShares Utilities i.e., IShares Utilities and Global X go up and down completely randomly.
Pair Corralation between IShares Utilities and Global X
Considering the 90-day investment horizon iShares Utilities ETF is expected to generate 0.9 times more return on investment than Global X. However, iShares Utilities ETF is 1.11 times less risky than Global X. It trades about 0.06 of its potential returns per unit of risk. Global X Renewable is currently generating about -0.07 per unit of risk. If you would invest 10,014 in iShares Utilities ETF on November 18, 2024 and sell it today you would earn a total of 113.00 from holding iShares Utilities ETF or generate 1.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Utilities ETF vs. Global X Renewable
Performance |
| Timeline |
| iShares Utilities ETF |
| Global X Renewable |
IShares Utilities and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Utilities and Global X
The main advantage of trading using opposite IShares Utilities and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Utilities 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 Utilities vs. iShares Industrials ETF | IShares Utilities vs. iShares Consumer Discretionary | IShares Utilities vs. iShares Consumer Staples | IShares Utilities vs. iShares Telecommunications ETF |
| Global X vs. Global X CleanTech | Global X vs. Global X Clean | Global X vs. Global X Wind | Global X vs. Global X Thematic |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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