Correlation Between IShares MSCI and Global X
Can any of the company-specific risk be diversified away by investing in both IShares MSCI 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 MSCI 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 MSCI World and Global X Global, you can compare the effects of market volatilities on IShares MSCI 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 MSCI with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Global X.
Diversification Opportunities for IShares MSCI and Global X
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Global is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI World and Global X Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Global and IShares MSCI 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 MSCI World 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 Global has no effect on the direction of IShares MSCI i.e., IShares MSCI and Global X go up and down completely randomly.
Pair Corralation between IShares MSCI and Global X
Assuming the 90 days trading horizon iShares MSCI World is expected to generate 0.75 times more return on investment than Global X. However, iShares MSCI World is 1.33 times less risky than Global X. It trades about 0.14 of its potential returns per unit of risk. Global X Global is currently generating about 0.1 per unit of risk. If you would invest 6,305 in iShares MSCI World on August 26, 2024 and sell it today you would earn a total of 3,240 from holding iShares MSCI World or generate 51.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI World vs. Global X Global
Performance |
| Timeline |
| iShares MSCI World |
| Global X Global |
IShares MSCI and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and Global X
The main advantage of trading using opposite IShares MSCI and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI 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 MSCI vs. Vanguard FTSE Canada | IShares MSCI vs. Vanguard Canadian Aggregate | IShares MSCI vs. Vanguard Total Market | IShares MSCI vs. Vanguard FTSE Emerging |
| Global X vs. Global X Industry | Global X vs. Global X Big | Global X vs. Evolve Innovation Index | Global X vs. Global X Robotics |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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