Correlation Between Global X and IShares Environmental
Can any of the company-specific risk be diversified away by investing in both Global X and IShares Environmental 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 Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Wind and iShares Environmental Infrastructure, you can compare the effects of market volatilities on Global X and IShares Environmental 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 Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and IShares Environmental.
Diversification Opportunities for Global X and IShares Environmental
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and IShares is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Global X Wind and iShares Environmental Infrastr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Environmental 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 Wind are associated (or correlated) with IShares Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Environmental has no effect on the direction of Global X i.e., Global X and IShares Environmental go up and down completely randomly.
Pair Corralation between Global X and IShares Environmental
Given the investment horizon of 90 days Global X Wind is expected to under-perform the IShares Environmental. In addition to that, Global X is 2.14 times more volatile than iShares Environmental Infrastructure. It trades about -0.03 of its total potential returns per unit of risk. iShares Environmental Infrastructure is currently generating about 0.07 per unit of volatility. If you would invest 3,133 in iShares Environmental Infrastructure on September 1, 2024 and sell it today you would earn a total of 219.00 from holding iShares Environmental Infrastructure or generate 6.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Global X Wind vs. iShares Environmental Infrastr
Performance |
| Timeline |
| Global X Wind |
| iShares Environmental |
Global X and IShares Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and IShares Environmental
The main advantage of trading using opposite Global X and IShares Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, IShares Environmental 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 Environmental will offset losses from the drop in IShares Environmental's long position.| Global X vs. SPDR Kensho New | Global X vs. Global X FinTech | Global X vs. Invesco SP SmallCap | Global X vs. iShares Genomics Immunology |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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