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 Canadian 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
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Global is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Canadian 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 Canadian 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 Canadian is expected to under-perform the Global X. In addition to that, IShares Core is 1.2 times more volatile than Global X Active. It trades about -0.05 of its total potential returns per unit of risk. Global X Active is currently generating about 0.12 per unit of volatility. If you would invest 1,002 in Global X Active on August 25, 2024 and sell it today you would earn a total of 3.00 from holding Global X Active or generate 0.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
iShares Core Canadian vs. Global X Active
Performance |
| Timeline |
| iShares Core Canadian |
| 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. Mackenzie Canadian Aggregate | IShares Core vs. Mackenzie Canadian Short | IShares Core vs. Mackenzie Core Plus | IShares Core vs. Mackenzie Investment Grade |
| Global X vs. Mackenzie Canadian Aggregate | Global X vs. Mackenzie Canadian Short | Global X vs. Mackenzie Core Plus | Global X vs. Mackenzie Investment Grade |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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