Correlation Between IShares Global and CI Global

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

By analyzing existing cross correlation between iShares Global Infrastructure and CI Global REIT, you can compare the effects of market volatilities on IShares Global and CI Global 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 Global with a short position of CI Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and CI Global.

Diversification Opportunities for IShares Global and CI Global

-0.6

Correlation Coefficient

IShares Global  CI Global

Excellent diversification

The 3 months correlation between IShares and CGRE is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Infrastructure and CI Global REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Global REIT and IShares Global 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 Global Infrastructure are associated (or correlated) with CI Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Global REIT has no effect on the direction of IShares Global i.e., IShares Global and CI Global go up and down completely randomly.

Pair Corralation between IShares Global and CI Global

Assuming the 90 days trading horizon iShares Global Infrastructure is expected to generate 1.05 times more return on investment than CI Global. However, IShares Global is 1.05 times more volatile than CI Global REIT. It trades about -0.13 of its potential returns per unit of risk. CI Global REIT is currently generating about -0.31 per unit of risk. If you would invest  5,043  in iShares Global Infrastructure on September 23, 2024 and sell it today you would lose (121.00) from holding iShares Global Infrastructure or give up 2.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

iShares Global Infrastructure  vs.  CI Global REIT

iShares Global Infra

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Global Infrastructure are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, IShares Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CI Global REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CI Global REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with IShares Global and CI Global

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

The idea behind iShares Global Infrastructure and CI Global REIT 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.