Correlation Between IShares Russell and Global X
Can any of the company-specific risk be diversified away by investing in both IShares Russell 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 Russell 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 Russell Mid Cap and Global X Adaptive, you can compare the effects of market volatilities on IShares Russell 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 Russell with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Russell and Global X.
Diversification Opportunities for IShares Russell and Global X
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Global is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell Mid Cap and Global X Adaptive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Adaptive and IShares Russell 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 Russell Mid Cap 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 Adaptive has no effect on the direction of IShares Russell i.e., IShares Russell and Global X go up and down completely randomly.
Pair Corralation between IShares Russell and Global X
Considering the 90-day investment horizon IShares Russell is expected to generate 1.35 times less return on investment than Global X. In addition to that, IShares Russell is 1.17 times more volatile than Global X Adaptive. It trades about 0.06 of its total potential returns per unit of risk. Global X Adaptive is currently generating about 0.1 per unit of volatility. If you would invest 3,041 in Global X Adaptive on August 26, 2024 and sell it today you would earn a total of 1,421 from holding Global X Adaptive or generate 46.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Russell Mid Cap vs. Global X Adaptive
Performance |
| Timeline |
| iShares Russell Mid |
| Global X Adaptive |
IShares Russell and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Russell and Global X
The main advantage of trading using opposite IShares Russell and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Russell 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 Russell vs. iShares Russell Mid Cap | IShares Russell vs. iShares Russell 2000 | IShares Russell vs. iShares Russell Mid Cap | IShares Russell vs. iShares Russell 1000 |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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