Correlation Between Global X and IShares International
Can any of the company-specific risk be diversified away by investing in both Global X and IShares International 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 International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X MSCI and iShares International Select, you can compare the effects of market volatilities on Global X and IShares International 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 International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and IShares International.
Diversification Opportunities for Global X and IShares International
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and IShares is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Global X MSCI and iShares International Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares International 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 MSCI are associated (or correlated) with IShares International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares International has no effect on the direction of Global X i.e., Global X and IShares International go up and down completely randomly.
Pair Corralation between Global X and IShares International
Given the investment horizon of 90 days Global X MSCI is expected to generate 1.56 times more return on investment than IShares International. However, Global X is 1.56 times more volatile than iShares International Select. It trades about 0.22 of its potential returns per unit of risk. iShares International Select is currently generating about 0.29 per unit of risk. If you would invest 2,415 in Global X MSCI on September 13, 2024 and sell it today you would earn a total of 100.99 from holding Global X MSCI or generate 4.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Global X MSCI vs. iShares International Select
Performance |
| Timeline |
| Global X MSCI |
| iShares International |
Global X and IShares International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and IShares International
The main advantage of trading using opposite Global X and IShares International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, IShares International 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 International will offset losses from the drop in IShares International's long position.| Global X vs. Global X MSCI | Global X vs. Global X Alternative | Global X vs. iShares Emerging Markets | Global X vs. Global X SuperDividend |
| IShares International vs. iShares Core High | IShares International vs. SPDR SP International | IShares International vs. iShares Select Dividend | IShares International vs. iShares Emerging Markets |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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