Correlation Between IShares Canadian and Global X
Can any of the company-specific risk be diversified away by investing in both IShares Canadian 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 Canadian 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 Canadian Universe and Global X SP, you can compare the effects of market volatilities on IShares Canadian 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 Canadian with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and Global X.
Diversification Opportunities for IShares Canadian and Global X
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and Global is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian Universe and Global X SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X SP and IShares Canadian 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 Canadian Universe 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 SP has no effect on the direction of IShares Canadian i.e., IShares Canadian and Global X go up and down completely randomly.
Pair Corralation between IShares Canadian and Global X
Assuming the 90 days trading horizon IShares Canadian is expected to generate 2.48 times less return on investment than Global X. But when comparing it to its historical volatility, iShares Canadian Universe is 2.1 times less risky than Global X. It trades about 0.11 of its potential returns per unit of risk. Global X SP is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,797 in Global X SP on August 30, 2024 and sell it today you would earn a total of 217.00 from holding Global X SP or generate 12.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Canadian Universe vs. Global X SP
Performance |
| Timeline |
| iShares Canadian Universe |
| Global X SP |
IShares Canadian and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and Global X
The main advantage of trading using opposite IShares Canadian and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian 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 Canadian vs. iShares Canadian Short | IShares Canadian vs. iShares MSCI EAFE | IShares Canadian vs. iShares Core Canadian | IShares Canadian vs. iShares Canadian Real |
| Global X vs. Global X Equal | Global X vs. Global X Enhanced | Global X vs. Global X Gold | Global X vs. Global X Canadian |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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