Correlation Between IShares India and Global X
Can any of the company-specific risk be diversified away by investing in both IShares India 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 India 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 India 50 and Global X Funds, you can compare the effects of market volatilities on IShares India 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 India with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares India and Global X.
Diversification Opportunities for IShares India and Global X
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Global is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding iShares India 50 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 India 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 India 50 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 India i.e., IShares India and Global X go up and down completely randomly.
Pair Corralation between IShares India and Global X
Given the investment horizon of 90 days IShares India is expected to generate 1.25 times less return on investment than Global X. But when comparing it to its historical volatility, iShares India 50 is 1.04 times less risky than Global X. It trades about 0.04 of its potential returns per unit of risk. Global X Funds is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,914 in Global X Funds on September 3, 2024 and sell it today you would earn a total of 178.00 from holding Global X Funds or generate 6.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares India 50 vs. Global X Funds
Performance |
| Timeline |
| iShares India 50 |
| Global X Funds |
IShares India and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares India and Global X
The main advantage of trading using opposite IShares India and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares India 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 India vs. iShares MSCI India | IShares India vs. Invesco India ETF | IShares India vs. iShares MSCI India | IShares India vs. WisdomTree India Earnings |
| Global X vs. Freedom Day Dividend | Global X vs. iShares MSCI China | Global X vs. SmartETFs Dividend Builder | Global X vs. Tidal ETF Trust |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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