Correlation Between IShares Consumer and Global X
Can any of the company-specific risk be diversified away by investing in both IShares Consumer 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 Consumer 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 Consumer Discretionary and Global X E commerce, you can compare the effects of market volatilities on IShares Consumer 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 Consumer with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Consumer and Global X.
Diversification Opportunities for IShares Consumer and Global X
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Global is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding iShares Consumer Discretionary and Global X E commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X E and IShares Consumer 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 Consumer Discretionary 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 E has no effect on the direction of IShares Consumer i.e., IShares Consumer and Global X go up and down completely randomly.
Pair Corralation between IShares Consumer and Global X
Considering the 90-day investment horizon iShares Consumer Discretionary is expected to generate 0.74 times more return on investment than Global X. However, iShares Consumer Discretionary is 1.36 times less risky than Global X. It trades about 0.24 of its potential returns per unit of risk. Global X E commerce is currently generating about 0.15 per unit of risk. If you would invest 8,788 in iShares Consumer Discretionary on August 26, 2024 and sell it today you would earn a total of 811.00 from holding iShares Consumer Discretionary or generate 9.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Consumer Discretionary vs. Global X E commerce
Performance |
| Timeline |
| iShares Consumer Dis |
| Global X E |
IShares Consumer and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Consumer and Global X
The main advantage of trading using opposite IShares Consumer and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Consumer 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 Consumer vs. VanEck Pharmaceutical ETF | IShares Consumer vs. VanEck Biotech ETF | IShares Consumer vs. VanEck Oil Services | IShares Consumer vs. iShares Transportation Average |
| Global X vs. VanEck Pharmaceutical ETF | Global X vs. VanEck Biotech ETF | Global X vs. VanEck Oil Services | Global X vs. iShares Transportation Average |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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