Correlation Between IShares Automation and Global X
Can any of the company-specific risk be diversified away by investing in both IShares Automation 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 Automation 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 Automation Robotics and Global X Lithium, you can compare the effects of market volatilities on IShares Automation 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 Automation with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Automation and Global X.
Diversification Opportunities for IShares Automation and Global X
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Global is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding iShares Automation Robotics and Global X Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Lithium and IShares Automation 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 Automation Robotics 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 Lithium has no effect on the direction of IShares Automation i.e., IShares Automation and Global X go up and down completely randomly.
Pair Corralation between IShares Automation and Global X
Assuming the 90 days trading horizon iShares Automation Robotics is expected to generate 0.47 times more return on investment than Global X. However, iShares Automation Robotics is 2.11 times less risky than Global X. It trades about 0.14 of its potential returns per unit of risk. Global X Lithium is currently generating about 0.05 per unit of risk. If you would invest 1,361 in iShares Automation Robotics on August 31, 2024 and sell it today you would earn a total of 55.00 from holding iShares Automation Robotics or generate 4.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
iShares Automation Robotics vs. Global X Lithium
Performance |
| Timeline |
| iShares Automation |
| Global X Lithium |
IShares Automation and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Automation and Global X
The main advantage of trading using opposite IShares Automation and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Automation 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 Automation vs. iShares MSCI Japan | IShares Automation vs. iShares JP Morgan | IShares Automation vs. iShares MSCI Europe | IShares Automation vs. iShares Nasdaq Biotechnology |
| Global X vs. Global X Data | Global X vs. Global X Copper | Global X vs. Global X ETFs | Global X vs. Global X Infrastructure |
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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