Correlation Between Global X and IShares Preferred
Can any of the company-specific risk be diversified away by investing in both Global X and IShares Preferred 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 Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X SuperDividend and iShares Preferred and, you can compare the effects of market volatilities on Global X and IShares Preferred 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 Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and IShares Preferred.
Diversification Opportunities for Global X and IShares Preferred
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and IShares is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Global X SuperDividend and iShares Preferred and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Preferred 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 SuperDividend are associated (or correlated) with IShares Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Preferred has no effect on the direction of Global X i.e., Global X and IShares Preferred go up and down completely randomly.
Pair Corralation between Global X and IShares Preferred
Given the investment horizon of 90 days Global X SuperDividend is expected to under-perform the IShares Preferred. In addition to that, Global X is 1.28 times more volatile than iShares Preferred and. It trades about -0.18 of its total potential returns per unit of risk. iShares Preferred and is currently generating about -0.02 per unit of volatility. If you would invest 3,272 in iShares Preferred and on August 29, 2024 and sell it today you would lose (10.00) from holding iShares Preferred and or give up 0.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X SuperDividend vs. iShares Preferred and
Performance |
| Timeline |
| Global X SuperDividend |
| iShares Preferred |
Global X and IShares Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and IShares Preferred
The main advantage of trading using opposite Global X and IShares Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, IShares Preferred 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 Preferred will offset losses from the drop in IShares Preferred's long position.| Global X vs. Main Sector Rotation | Global X vs. Franklin Exponential Data | Global X vs. Goldman Sachs Innovate |
| IShares Preferred vs. ETF Series Solutions | IShares Preferred vs. Aquagold International | IShares Preferred vs. Morningstar Unconstrained Allocation | IShares Preferred vs. High Yield Municipal Fund |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |