Correlation Between Global X and IShares Core
Can any of the company-specific risk be diversified away by investing in both Global X and IShares Core 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 Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Enhanced and iShares Core SP, you can compare the effects of market volatilities on Global X and IShares Core 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 Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and IShares Core.
Diversification Opportunities for Global X and IShares Core
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and IShares is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Global X Enhanced and iShares Core SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core SP 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 Enhanced are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core SP has no effect on the direction of Global X i.e., Global X and IShares Core go up and down completely randomly.
Pair Corralation between Global X and IShares Core
Assuming the 90 days trading horizon Global X Enhanced is expected to generate 1.4 times more return on investment than IShares Core. However, Global X is 1.4 times more volatile than iShares Core SP. It trades about 0.21 of its potential returns per unit of risk. iShares Core SP is currently generating about 0.12 per unit of risk. If you would invest 2,067 in Global X Enhanced on November 2, 2024 and sell it today you would earn a total of 549.00 from holding Global X Enhanced or generate 26.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Enhanced vs. iShares Core SP
Performance |
| Timeline |
| Global X Enhanced |
| iShares Core SP |
Global X and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and IShares Core
The main advantage of trading using opposite Global X and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, IShares Core 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 Core will offset losses from the drop in IShares Core's long position.| Global X vs. Global X Equal | Global X vs. Global X Enhanced | Global X vs. Global X Gold | Global X vs. Global X Canadian |
| IShares Core vs. iShares SPTSX 60 | IShares Core vs. iShares MSCI EAFE | IShares Core vs. iShares Core SPTSX | IShares Core vs. iShares SPTSX Capped |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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