Correlation Between IShares Healthcare and Global X
Can any of the company-specific risk be diversified away by investing in both IShares Healthcare 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 Healthcare 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 Healthcare ETF and Global X Aging, you can compare the effects of market volatilities on IShares Healthcare 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 Healthcare with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Healthcare and Global X.
Diversification Opportunities for IShares Healthcare and Global X
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Global is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding iShares Healthcare ETF and Global X Aging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Aging and IShares Healthcare 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 Healthcare ETF 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 Aging has no effect on the direction of IShares Healthcare i.e., IShares Healthcare and Global X go up and down completely randomly.
Pair Corralation between IShares Healthcare and Global X
Considering the 90-day investment horizon IShares Healthcare is expected to generate 1.37 times less return on investment than Global X. But when comparing it to its historical volatility, iShares Healthcare ETF is 1.07 times less risky than Global X. It trades about 0.07 of its potential returns per unit of risk. Global X Aging is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,662 in Global X Aging on August 26, 2024 and sell it today you would earn a total of 450.00 from holding Global X Aging or generate 16.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Healthcare ETF vs. Global X Aging
Performance |
| Timeline |
| iShares Healthcare ETF |
| Global X Aging |
IShares Healthcare and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Healthcare and Global X
The main advantage of trading using opposite IShares Healthcare and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Healthcare 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 Healthcare vs. Global X Clean | IShares Healthcare vs. Global X Renewable | IShares Healthcare vs. Global X Thematic | IShares Healthcare vs. Global X AgTech |
| Global X vs. Global X Clean | Global X vs. Global X Renewable | Global X vs. Global X Thematic | Global X vs. Global X AgTech |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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