Correlation Between Global X and IShares Semiconductor
Can any of the company-specific risk be diversified away by investing in both Global X and IShares Semiconductor 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 Global X and IShares Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Lithium and iShares Semiconductor ETF, you can compare the effects of market volatilities on Global X and IShares Semiconductor 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 Global X with a short position of IShares Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and IShares Semiconductor.
Diversification Opportunities for Global X and IShares Semiconductor
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Global and IShares is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Global X Lithium and iShares Semiconductor ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Semiconductor ETF and Global X 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 Global X Lithium are associated (or correlated) with IShares Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Semiconductor ETF has no effect on the direction of Global X i.e., Global X and IShares Semiconductor go up and down completely randomly.
Pair Corralation between Global X and IShares Semiconductor
Considering the 90-day investment horizon Global X Lithium is expected to generate 0.49 times more return on investment than IShares Semiconductor. However, Global X Lithium is 2.02 times less risky than IShares Semiconductor. It trades about 0.11 of its potential returns per unit of risk. iShares Semiconductor ETF is currently generating about 0.02 per unit of risk. If you would invest 4,012 in Global X Lithium on November 3, 2024 and sell it today you would earn a total of 99.00 from holding Global X Lithium or generate 2.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Global X Lithium vs. iShares Semiconductor ETF
Performance |
| Timeline |
| Global X Lithium |
| iShares Semiconductor ETF |
Global X and IShares Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and IShares Semiconductor
The main advantage of trading using opposite Global X and IShares Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, IShares Semiconductor 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 IShares Semiconductor will offset losses from the drop in IShares Semiconductor's long position.| Global X vs. Invesco Solar ETF | Global X vs. Albemarle Corp | Global X vs. Lithium Americas Corp | Global X vs. iShares Global 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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