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 Developed and Global X Funds, 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
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between IShares and Global is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding iShares International Develope and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds 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 Developed 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 Funds 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
Given the investment horizon of 90 days IShares International is expected to generate 1.98 times less return on investment than Global X. In addition to that, IShares International is 1.01 times more volatile than Global X Funds. It trades about 0.02 of its total potential returns per unit of risk. Global X Funds is currently generating about 0.04 per unit of volatility. If you would invest 2,438 in Global X Funds on August 24, 2024 and sell it today you would earn a total of 213.00 from holding Global X Funds or generate 8.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares International Develope vs. Global X Funds
Performance |
| Timeline |
| iShares International |
| Global X Funds |
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. FlexShares Global Quality | IShares International vs. ALPS REIT Dividend | IShares International vs. WisdomTree New Economy | IShares International vs. First Trust RBA |
| Global X vs. iShares International Developed | Global X vs. iShares MSCI Emerging | Global X vs. iShares MSCI Frontier | Global X vs. iShares MSCI Emerging |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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