Correlation Between IShares 1 and GLOBAL X

Can any of the company-specific risk be diversified away by investing in both IShares 1 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 1 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 1 5 Year and GLOBAL X HIGH, you can compare the effects of market volatilities on IShares 1 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 1 with a short position of GLOBAL X. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 1 and GLOBAL X.

Diversification Opportunities for IShares 1 and GLOBAL X

0.19

Correlation Coefficient

IShares 1  GLOBAL X

Average diversification

The 3 months correlation between IShares and GLOBAL is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding iShares 1 5 Year and GLOBAL X HIGH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GLOBAL X HIGH and IShares 1 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 1 5 Year 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 HIGH has no effect on the direction of IShares 1 i.e., IShares 1 and GLOBAL X go up and down completely randomly.

Pair Corralation between IShares 1 and GLOBAL X

Assuming the 90 days trading horizon IShares 1 is expected to generate 138.0 times less return on investment than GLOBAL X. In addition to that, IShares 1 is 9.37 times more volatile than GLOBAL X HIGH. It trades about 0.0 of its total potential returns per unit of risk. GLOBAL X HIGH is currently generating about 0.76 per unit of volatility. If you would invest  4,964  in GLOBAL X HIGH on September 22, 2024 and sell it today you would earn a total of  44.00  from holding GLOBAL X HIGH or generate 0.89% return on investment over 90 days.

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

iShares 1 5 Year  vs.  GLOBAL X HIGH

iShares 1 5

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares 1 5 Year has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, IShares 1 is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

GLOBAL X HIGH

Risk-Adjusted Performance

59 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in GLOBAL X HIGH are ranked lower than 59 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, GLOBAL X is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares 1 and GLOBAL X

The main advantage of trading using opposite IShares 1 and GLOBAL X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 1 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.

The idea behind iShares 1 5 Year and GLOBAL X HIGH 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.