Correlation Between Global X and IShares Mortgage
Can any of the company-specific risk be diversified away by investing in both Global X and IShares Mortgage 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 Mortgage 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 Mortgage Real, you can compare the effects of market volatilities on Global X and IShares Mortgage 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 Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and IShares Mortgage.
Diversification Opportunities for Global X and IShares Mortgage
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and IShares is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Global X SuperDividend and iShares Mortgage Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Mortgage Real 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 Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Mortgage Real has no effect on the direction of Global X i.e., Global X and IShares Mortgage go up and down completely randomly.
Pair Corralation between Global X and IShares Mortgage
Given the investment horizon of 90 days Global X is expected to generate 1.4 times less return on investment than IShares Mortgage. But when comparing it to its historical volatility, Global X SuperDividend is 1.38 times less risky than IShares Mortgage. It trades about 0.02 of its potential returns per unit of risk. iShares Mortgage Real is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,060 in iShares Mortgage Real on August 31, 2024 and sell it today you would earn a total of 264.00 from holding iShares Mortgage Real or generate 12.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X SuperDividend vs. iShares Mortgage Real
Performance |
| Timeline |
| Global X SuperDividend |
| iShares Mortgage Real |
Global X and IShares Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and IShares Mortgage
The main advantage of trading using opposite Global X and IShares Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, IShares Mortgage 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 Mortgage will offset losses from the drop in IShares Mortgage's long position.| Global X vs. Global X SuperDividend | Global X vs. Invesco KBW Premium | Global X vs. Global X SuperDividend | Global X vs. Invesco KBW High |
| IShares Mortgage vs. VanEck Mortgage REIT | IShares Mortgage vs. iShares Residential and | IShares Mortgage vs. iShares Preferred and | IShares Mortgage vs. Global X SuperDividend |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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