Correlation Between IShares Core and Global X
Can any of the company-specific risk be diversified away by investing in both IShares Core 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 Core 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 Core MSCI and Global X Active, you can compare the effects of market volatilities on IShares Core 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 Core with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Global X.
Diversification Opportunities for IShares Core and Global X
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Global is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and Global X Active in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Active and IShares Core 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 Core MSCI 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 Active has no effect on the direction of IShares Core i.e., IShares Core and Global X go up and down completely randomly.
Pair Corralation between IShares Core and Global X
Assuming the 90 days trading horizon IShares Core is expected to generate 1.83 times less return on investment than Global X. But when comparing it to its historical volatility, iShares Core MSCI is 1.17 times less risky than Global X. It trades about 0.07 of its potential returns per unit of risk. Global X Active is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,770 in Global X Active on August 29, 2024 and sell it today you would earn a total of 56.00 from holding Global X Active or generate 1.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core MSCI vs. Global X Active
Performance |
| Timeline |
| iShares Core MSCI |
| Global X Active |
IShares Core and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Global X
The main advantage of trading using opposite IShares Core and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core 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 Core vs. iShares Core MSCI | IShares Core vs. iShares Core MSCI | IShares Core vs. iShares High Dividend | IShares Core vs. iShares Core MSCI |
| Global X vs. Global X Active | Global X vs. Global X Active | Global X vs. Global X Seasonal | Global X vs. Global X Active |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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