Correlation Between IShares Latin and Global X
Can any of the company-specific risk be diversified away by investing in both IShares Latin 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 Latin 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 Latin America and Global X FTSE, you can compare the effects of market volatilities on IShares Latin 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 Latin with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Latin and Global X.
Diversification Opportunities for IShares Latin and Global X
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Global is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding iShares Latin America and Global X FTSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X FTSE and IShares Latin 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 Latin America 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 FTSE has no effect on the direction of IShares Latin i.e., IShares Latin and Global X go up and down completely randomly.
Pair Corralation between IShares Latin and Global X
Considering the 90-day investment horizon iShares Latin America is expected to under-perform the Global X. In addition to that, IShares Latin is 1.37 times more volatile than Global X FTSE. It trades about -0.16 of its total potential returns per unit of risk. Global X FTSE is currently generating about 0.04 per unit of volatility. If you would invest 1,657 in Global X FTSE on September 15, 2024 and sell it today you would earn a total of 10.00 from holding Global X FTSE or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Latin America vs. Global X FTSE
Performance |
| Timeline |
| iShares Latin America |
| Global X FTSE |
IShares Latin and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Latin and Global X
The main advantage of trading using opposite IShares Latin and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Latin 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 Latin vs. iShares MSCI Mexico | IShares Latin vs. iShares MSCI Pacific | IShares Latin vs. iShares MSCI South | IShares Latin vs. iShares MSCI Brazil |
| Global X vs. iShares Latin America | Global X vs. iShares Europe ETF | Global X vs. iShares MSCI Malaysia | Global X vs. iShares MSCI Sweden |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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