Correlation Between Global X and IShares Emergent

Can any of the company-specific risk be diversified away by investing in both Global X and IShares Emergent 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 Emergent into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global X Blockchain and iShares Emergent Food, you can compare the effects of market volatilities on Global X and IShares Emergent 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 Emergent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and IShares Emergent.

Diversification Opportunities for Global X and IShares Emergent

-0.08

Correlation Coefficient

Global X  IShares Emergent

Good diversification

The 3 months correlation between Global and IShares is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Global X Blockchain and iShares Emergent Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Emergent Food 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 Blockchain are associated (or correlated) with IShares Emergent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Emergent Food has no effect on the direction of Global X i.e., Global X and IShares Emergent go up and down completely randomly.

Pair Corralation between Global X and IShares Emergent

Given the investment horizon of 90 days Global X Blockchain is expected to under-perform the IShares Emergent. In addition to that, Global X is 6.17 times more volatile than iShares Emergent Food. It trades about -0.05 of its total potential returns per unit of risk. iShares Emergent Food is currently generating about -0.22 per unit of volatility. If you would invest  2,050  in iShares Emergent Food on September 22, 2024 and sell it today you would lose (80.00) from holding iShares Emergent Food or give up 3.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Global X Blockchain  vs.  iShares Emergent Food

Global X Blockchain

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Blockchain are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental indicators, Global X demonstrated solid returns over the last few months and may actually be approaching a breakup point.

iShares Emergent Food

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Emergent Food has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, IShares Emergent is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Global X and IShares Emergent

The main advantage of trading using opposite Global X and IShares Emergent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, IShares Emergent 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 Emergent will offset losses from the drop in IShares Emergent's long position.

The idea behind Global X Blockchain and iShares Emergent Food pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.