Correlation Between Global X and IShares Healthcare
Can any of the company-specific risk be diversified away by investing in both Global X and IShares Healthcare 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 Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Renewable and iShares Healthcare Providers, you can compare the effects of market volatilities on Global X and IShares Healthcare 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 Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and IShares Healthcare.
Diversification Opportunities for Global X and IShares Healthcare
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and IShares is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Global X Renewable and iShares Healthcare Providers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Healthcare 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 Renewable are associated (or correlated) with IShares Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Healthcare has no effect on the direction of Global X i.e., Global X and IShares Healthcare go up and down completely randomly.
Pair Corralation between Global X and IShares Healthcare
Given the investment horizon of 90 days Global X Renewable is expected to under-perform the IShares Healthcare. In addition to that, Global X is 1.26 times more volatile than iShares Healthcare Providers. It trades about -0.19 of its total potential returns per unit of risk. iShares Healthcare Providers is currently generating about 0.13 per unit of volatility. If you would invest 5,253 in iShares Healthcare Providers on August 29, 2024 and sell it today you would earn a total of 176.00 from holding iShares Healthcare Providers or generate 3.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Renewable vs. iShares Healthcare Providers
Performance |
| Timeline |
| Global X Renewable |
| iShares Healthcare |
Global X and IShares Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and IShares Healthcare
The main advantage of trading using opposite Global X and IShares Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, IShares Healthcare 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 Healthcare will offset losses from the drop in IShares Healthcare's long position.| Global X vs. Global X CleanTech | Global X vs. Global X Clean | Global X vs. Global X Wind | Global X vs. Global X Thematic |
| IShares Healthcare vs. Global X Clean | IShares Healthcare vs. Global X Renewable | IShares Healthcare vs. Global X Thematic | IShares Healthcare vs. Global X AgTech |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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