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 Comm and Global X Social, 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
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Global is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Comm and Global X Social in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Social 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 Comm 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 Social 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
Considering the 90-day investment horizon iShares Global Comm is expected to generate 0.67 times more return on investment than Global X. However, iShares Global Comm is 1.5 times less risky than Global X. It trades about 0.12 of its potential returns per unit of risk. Global X Social is currently generating about 0.05 per unit of risk. If you would invest 5,457 in iShares Global Comm on August 30, 2024 and sell it today you would earn a total of 4,205 from holding iShares Global Comm or generate 77.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Global Comm vs. Global X Social
Performance |
| Timeline |
| iShares Global Comm |
| Global X Social |
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. iShares Global Financials | IShares Global vs. iShares Global Tech | IShares Global vs. iShares Global Healthcare | IShares Global vs. iShares Telecommunications ETF |
| Global X vs. Global X Millennials | Global X vs. First Trust Cloud | Global X vs. Global X FinTech | Global X vs. Invesco NASDAQ Internet |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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