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 Utilities and Global X CleanTech, 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
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IShares and Global is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Utilities and Global X CleanTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X CleanTech 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 Utilities 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 CleanTech 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 Utilities is expected to generate 0.38 times more return on investment than Global X. However, iShares Global Utilities is 2.63 times less risky than Global X. It trades about 0.15 of its potential returns per unit of risk. Global X CleanTech is currently generating about -0.05 per unit of risk. If you would invest 5,496 in iShares Global Utilities on August 27, 2024 and sell it today you would earn a total of 1,405 from holding iShares Global Utilities or generate 25.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Global Utilities vs. Global X CleanTech
Performance |
| Timeline |
| iShares Global Utilities |
| Global X CleanTech |
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. Global X CleanTech | IShares Global vs. Global X Clean | IShares Global vs. Global X Wind | IShares Global vs. Global X Thematic |
| Global X vs. Global X Telemedicine | Global X vs. ALPS Clean Energy | Global X vs. Global X Renewable | Global X vs. SPDR Kensho Clean |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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