Correlation Between IShares International and Global X
Can any of the company-specific risk be diversified away by investing in both IShares International 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 International 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 International Select and Global X MSCI, you can compare the effects of market volatilities on IShares International 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 International with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares International and Global X.
Diversification Opportunities for IShares International and Global X
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Global is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding iShares International Select and Global X MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X MSCI and IShares International 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 International Select 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 MSCI has no effect on the direction of IShares International i.e., IShares International and Global X go up and down completely randomly.
Pair Corralation between IShares International and Global X
Considering the 90-day investment horizon IShares International is expected to generate 1.19 times less return on investment than Global X. But when comparing it to its historical volatility, iShares International Select is 1.56 times less risky than Global X. It trades about 0.29 of its potential returns per unit of risk. Global X MSCI is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 2,415 in Global X MSCI on September 13, 2024 and sell it today you would earn a total of 100.99 from holding Global X MSCI or generate 4.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
iShares International Select vs. Global X MSCI
Performance |
| Timeline |
| iShares International |
| Global X MSCI |
IShares International and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares International and Global X
The main advantage of trading using opposite IShares International and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares International 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 International vs. iShares Core High | IShares International vs. SPDR SP International | IShares International vs. iShares Select Dividend | IShares International vs. iShares Emerging Markets |
| Global X vs. Global X MSCI | Global X vs. Global X Alternative | Global X vs. iShares Emerging Markets | Global X vs. Global X SuperDividend |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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