Correlation Between IShares Global and Global X
Can any of the company-specific risk be diversified away by investing in both IShares Global 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 Global 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 Global Healthcare and Global X Semiconductor, you can compare the effects of market volatilities on IShares Global 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 Global with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and Global X.
Diversification Opportunities for IShares Global and Global X
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and Global is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Healthcare and Global X Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Semiconductor and IShares Global 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 Global Healthcare 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 Semiconductor has no effect on the direction of IShares Global i.e., IShares Global and Global X go up and down completely randomly.
Pair Corralation between IShares Global and Global X
Assuming the 90 days trading horizon iShares Global Healthcare is expected to under-perform the Global X. But the etf apears to be less risky and, when comparing its historical volatility, iShares Global Healthcare is 1.66 times less risky than Global X. The etf trades about -0.17 of its potential returns per unit of risk. The Global X Semiconductor is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 1,656 in Global X Semiconductor on August 25, 2024 and sell it today you would lose (21.00) from holding Global X Semiconductor or give up 1.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Global Healthcare vs. Global X Semiconductor
Performance |
| Timeline |
| iShares Global Healthcare |
| Global X Semiconductor |
IShares Global and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Global and Global X
The main advantage of trading using opposite IShares Global and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global 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 Global vs. BetaShares Global Government | IShares Global vs. BetaShares Geared Australian | IShares Global vs. Global X Semiconductor | IShares Global vs. iShares UBS Government |
| Global X vs. CD Private Equity | Global X vs. SPDR SPASX 200 | Global X vs. Ecofibre | Global X vs. iShares Global Healthcare |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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