Correlation Between IShares Europe and Global X
Can any of the company-specific risk be diversified away by investing in both IShares Europe 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 Europe 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 Europe ETF and Global X MSCI, you can compare the effects of market volatilities on IShares Europe 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 Europe with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Europe and Global X.
Diversification Opportunities for IShares Europe and Global X
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and Global is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding iShares Europe ETF 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 Europe 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 Europe 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 MSCI has no effect on the direction of IShares Europe i.e., IShares Europe and Global X go up and down completely randomly.
Pair Corralation between IShares Europe and Global X
Considering the 90-day investment horizon iShares Europe ETF is expected to under-perform the Global X. But the etf apears to be less risky and, when comparing its historical volatility, iShares Europe ETF is 1.15 times less risky than Global X. The etf trades about -0.11 of its potential returns per unit of risk. The Global X MSCI is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,506 in Global X MSCI on September 3, 2024 and sell it today you would earn a total of 10.15 from holding Global X MSCI or generate 0.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Europe ETF vs. Global X MSCI
Performance |
| Timeline |
| iShares Europe ETF |
| Global X MSCI |
IShares Europe and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Europe and Global X
The main advantage of trading using opposite IShares Europe and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Europe 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 Europe vs. iShares MSCI Eurozone | IShares Europe vs. iShares MSCI Pacific | IShares Europe vs. iShares Latin America | IShares Europe vs. iShares MSCI France |
| Global X vs. iShares MSCI Malaysia | Global X vs. iShares MSCI Hong | Global X vs. iShares MSCI Australia | Global X vs. iShares MSCI Taiwan |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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