Correlation Between IShares SP and Global X
Can any of the company-specific risk be diversified away by investing in both IShares SP 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 SP 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 SP 500 and Global X SP, you can compare the effects of market volatilities on IShares SP 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 SP with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SP and Global X.
Diversification Opportunities for IShares SP and Global X
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Global is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP 500 and Global X SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X SP and IShares SP 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 SP 500 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 SP has no effect on the direction of IShares SP i.e., IShares SP and Global X go up and down completely randomly.
Pair Corralation between IShares SP and Global X
Considering the 90-day investment horizon iShares SP 500 is expected to generate 1.19 times more return on investment than Global X. However, IShares SP is 1.19 times more volatile than Global X SP. It trades about 0.15 of its potential returns per unit of risk. Global X SP is currently generating about 0.09 per unit of risk. If you would invest 19,717 in iShares SP 500 on August 30, 2024 and sell it today you would earn a total of 833.00 from holding iShares SP 500 or generate 4.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares SP 500 vs. Global X SP
Performance |
| Timeline |
| iShares SP 500 |
| Global X SP |
IShares SP and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares SP and Global X
The main advantage of trading using opposite IShares SP and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SP 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 SP vs. iShares SP 500 | IShares SP vs. iShares SP Mid Cap | IShares SP vs. iShares SP Small Cap | IShares SP vs. iShares SP Mid Cap |
| Global X vs. Global X Alternative | Global X vs. Global X MSCI | Global X vs. Global X MSCI | Global X vs. Global X SP |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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