Correlation Between Global X and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Global X and IShares MSCI 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 MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Millennials and iShares MSCI ACWI, you can compare the effects of market volatilities on Global X and IShares MSCI 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 MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and IShares MSCI.
Diversification Opportunities for Global X and IShares MSCI
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and IShares is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Global X Millennials and iShares MSCI ACWI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI ACWI 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 Millennials are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI ACWI has no effect on the direction of Global X i.e., Global X and IShares MSCI go up and down completely randomly.
Pair Corralation between Global X and IShares MSCI
Given the investment horizon of 90 days Global X Millennials is expected to generate 1.06 times more return on investment than IShares MSCI. However, Global X is 1.06 times more volatile than iShares MSCI ACWI. It trades about 0.37 of its potential returns per unit of risk. iShares MSCI ACWI is currently generating about 0.2 per unit of risk. If you would invest 4,500 in Global X Millennials on November 3, 2024 and sell it today you would earn a total of 284.00 from holding Global X Millennials or generate 6.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Global X Millennials vs. iShares MSCI ACWI
Performance |
| Timeline |
| Global X Millennials |
| iShares MSCI ACWI |
Global X and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and IShares MSCI
The main advantage of trading using opposite Global X and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, IShares MSCI 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 MSCI will offset losses from the drop in IShares MSCI's long position.| Global X vs. Global X Social | Global X vs. Vanguard Mega Cap | Global X vs. Global X Guru | Global X vs. iShares Core Moderate |
| IShares MSCI vs. iShares MSCI USA | IShares MSCI vs. SPDR SSGA Gender | IShares MSCI vs. iShares MSCI KLD | IShares MSCI vs. SPDR SP 500 |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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