Correlation Between IShares ESG and Global X
Can any of the company-specific risk be diversified away by investing in both IShares ESG and Global X 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 IShares ESG and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares ESG Advanced and Global X NASDAQ, you can compare the effects of market volatilities on IShares ESG and Global X 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 IShares ESG with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and Global X.
Diversification Opportunities for IShares ESG and Global X
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Global is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Advanced and Global X NASDAQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X NASDAQ and IShares ESG 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 iShares ESG Advanced are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X NASDAQ has no effect on the direction of IShares ESG i.e., IShares ESG and Global X go up and down completely randomly.
Pair Corralation between IShares ESG and Global X
Given the investment horizon of 90 days iShares ESG Advanced is expected to generate 0.95 times more return on investment than Global X. However, iShares ESG Advanced is 1.06 times less risky than Global X. It trades about 0.11 of its potential returns per unit of risk. Global X NASDAQ is currently generating about 0.1 per unit of risk. If you would invest 3,066 in iShares ESG Advanced on August 30, 2024 and sell it today you would earn a total of 2,107 from holding iShares ESG Advanced or generate 68.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares ESG Advanced vs. Global X NASDAQ
Performance |
| Timeline |
| iShares ESG Advanced |
| Global X NASDAQ |
IShares ESG and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares ESG and Global X
The main advantage of trading using opposite IShares ESG and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| IShares ESG vs. iShares ESG Advanced | IShares ESG vs. iShares ESG MSCI | IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG USD |
| Global X vs. Global X NASDAQ | Global X vs. Global X NASDAQ | Global X vs. Global X SP | Global X vs. Global X SP |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |