Correlation Between Global X and IShares China
Can any of the company-specific risk be diversified away by investing in both Global X and IShares China 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 China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Semiconductor and iShares China LargeCap, you can compare the effects of market volatilities on Global X and IShares China 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 China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and IShares China.
Diversification Opportunities for Global X and IShares China
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and IShares is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Global X Semiconductor and iShares China LargeCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares China LargeCap 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 Semiconductor are associated (or correlated) with IShares China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares China LargeCap has no effect on the direction of Global X i.e., Global X and IShares China go up and down completely randomly.
Pair Corralation between Global X and IShares China
Assuming the 90 days trading horizon Global X Semiconductor is expected to generate 1.3 times more return on investment than IShares China. However, Global X is 1.3 times more volatile than iShares China LargeCap. It trades about -0.1 of its potential returns per unit of risk. iShares China LargeCap is currently generating about -0.22 per unit of risk. If you would invest 1,694 in Global X Semiconductor on August 29, 2024 and sell it today you would lose (56.00) from holding Global X Semiconductor or give up 3.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Semiconductor vs. iShares China LargeCap
Performance |
| Timeline |
| Global X Semiconductor |
| iShares China LargeCap |
Global X and IShares China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and IShares China
The main advantage of trading using opposite Global X and IShares China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, IShares China 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 China will offset losses from the drop in IShares China's long position.| Global X vs. BetaShares Geared Australian | Global X vs. BetaShares Global Robotics | Global X vs. iShares China LargeCap | Global X vs. Russell Australian Government |
| IShares China vs. iShares MSCI Emerging | IShares China vs. iShares Global Aggregate | IShares China vs. iShares CoreSP MidCap | IShares China vs. iShares SP 500 |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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