Correlation Between IShares Financial and Global X
Can any of the company-specific risk be diversified away by investing in both IShares Financial 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 Financial 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 Financial Services and Global X Blockchain, you can compare the effects of market volatilities on IShares Financial 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 Financial with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Financial and Global X.
Diversification Opportunities for IShares Financial and Global X
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Global is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding iShares Financial Services and Global X Blockchain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Blockchain and IShares Financial 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 Financial Services 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 Blockchain has no effect on the direction of IShares Financial i.e., IShares Financial and Global X go up and down completely randomly.
Pair Corralation between IShares Financial and Global X
Considering the 90-day investment horizon IShares Financial is expected to generate 3.08 times less return on investment than Global X. But when comparing it to its historical volatility, iShares Financial Services is 3.74 times less risky than Global X. It trades about 0.21 of its potential returns per unit of risk. Global X Blockchain is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 5,290 in Global X Blockchain on August 24, 2024 and sell it today you would earn a total of 1,238 from holding Global X Blockchain or generate 23.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Financial Services vs. Global X Blockchain
Performance |
| Timeline |
| iShares Financial |
| Global X Blockchain |
IShares Financial and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Financial and Global X
The main advantage of trading using opposite IShares Financial and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Financial 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 Financial vs. Vanguard Industrials Index | IShares Financial vs. Vanguard Consumer Discretionary | IShares Financial vs. Vanguard Materials Index | IShares Financial vs. Vanguard Health Care |
| Global X vs. Vanguard Industrials Index | Global X vs. Vanguard Consumer Discretionary | Global X vs. Vanguard Materials Index | Global X vs. Vanguard Health Care |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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