Correlation Between Global X and IShares Global
Can any of the company-specific risk be diversified away by investing in both Global X and IShares Global 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 Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Infrastructure and iShares Global Infrastructure, you can compare the effects of market volatilities on Global X and IShares Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and IShares Global.
Diversification Opportunities for Global X and IShares Global
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and IShares is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Global X Infrastructure and iShares Global Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Infra 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 Infrastructure are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Infra has no effect on the direction of Global X i.e., Global X and IShares Global go up and down completely randomly.
Pair Corralation between Global X and IShares Global
Given the investment horizon of 90 days Global X Infrastructure is expected to generate 1.47 times more return on investment than IShares Global. However, Global X is 1.47 times more volatile than iShares Global Infrastructure. It trades about 0.11 of its potential returns per unit of risk. iShares Global Infrastructure is currently generating about 0.1 per unit of risk. If you would invest 3,152 in Global X Infrastructure on August 29, 2024 and sell it today you would earn a total of 1,407 from holding Global X Infrastructure or generate 44.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Infrastructure vs. iShares Global Infrastructure
Performance |
| Timeline |
| Global X Infrastructure |
| iShares Global Infra |
Global X and IShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and IShares Global
The main advantage of trading using opposite Global X and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, IShares Global 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 Global will offset losses from the drop in IShares Global's long position.| Global X vs. iShares Infrastructure ETF | Global X vs. Global X Cloud | Global X vs. Global X Cybersecurity | Global X vs. Invesco Dynamic Leisure |
| IShares Global vs. SPDR SP Global | IShares Global vs. FlexShares STOXX Global | IShares Global vs. iShares Infrastructure ETF | IShares Global vs. iShares Global Utilities |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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